Elliott Associates is holding talks with foreign investment institutions that hold shares in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) aimed at joining forces ahead of the upcoming general shareholders' meeting scheduled for this April for May. The goal is to influence what is happening in Bezeq at the corporate governance level and have other directors appointed to replace some of the directors in the company, if the matter is placed on the agenda. Most of Elliott Associates' contacts have been with foreign investors, but it cannot be ruled out that Israeli investment institutions will also be approached.
It was reported on Tuesday that Elliott Associates was demanding the immediate resignation of all the Bezeq directors who were suspects in the investigation of Bezeq conducted by the Israel Securities Authority, or who were linked with Eurocom, and their replacement by independent and professional directors, to be selected by an independent board of directors committee following consultation with the main shareholders in Bezeq and approved in a vote by the shareholders at the earliest possible opportunity.
In a talk with foreign investors, they expressed enthusiasm for Elliott Associates' measure and gladness that it had taken up the challenge by doing something about the board of directors' policy. Foreign investors welcomed Elliott Associates' efforts, in view of the current situation.
At the same time, in an unrelated development, a meeting is expected to take place in the coming weeks between Bezeq chairperson David Granot and representatives of Elliott Associates. The latter wrote to Granot demanding the replacement of all the directors in Bezeq affected by the Israel Securities Authority investigation who were involved in approving the party at interest deals that are under investigation.
Elliott Associates, an activist New York hedge fund managed by Paul Singer, owns 4.8% of Bezeq, together with other funds, and Bezeq will meet with its representatives, just as it regularly meets with foreign investors. Elliott Associate cannot exceed a 5% holding in Bezeq without government approval. In order to influence appointments to the board of directors, Elliott Associates must win support from additional forces among Bezeq's investors in order to obtain a critical mass that can affect what is done by the Bezeq board of directors.
Local investment institutions managed to thwart the extension of former Bezeq director Haggai Herman's term, and to bring about the appointment of Ze'ev Wormbrand as director on their behalf, after Herman's term expired and the extension of his term was put to a vote. If the investors combine forces, they can influence the appointment of directors in the company and other matters, for example bonuses for company officers.
In Elliott Associates' letter to Granot, the fund demanded simplification of the company's ownership structure by eliminating at least one level of its holding pyramid (B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM), Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD), and Eurocom Communications), and also demanded the resignation of company directors.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 18, 2018
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