After most of Internet Gold Golden Lines Ltd.'s (Nasdaq: IGLD; TASE:IGLD) bondholders voted in favor of the bid submitted by the Searchlight fund to acquire its shares in B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM), the controlling shareholder in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), Gad Zeevi has submitted a new binding bid for a NIS 950 million investment in B Communications.
In contrast to the Searchlight deal, which is aimed at Internet Gold and its creditors, Zeevi is making a bid directly to B Communications' bondholders, which is liable to set off a bond war between the two levels. Zeevi submitted his bid through Adv. Amir Bartov and Adv. Ayana Wechler to B Communications CEO Ami Barlev in order to bypass Internet Gold, whose bondholders preferred Searchlight's bid.
In his previous bid, Zeevi offered to inject NIS 350 million into B Communications via Internet Gold. In his current bid, Zeevi is offering to invest almost three times as much directly in B Communications.
According to Zeevi's bid, the deal will be at a value of NIS 300 million before money - B Communications' current shareholders' equity. This means that Zeevi's holding in B Communications' shares will be over 75%. This deal, which requires a permit from the Ministry of Communications, is likely to encounter opposition from Internet Gold and its bondholders; the minority shareholders in B Communications, whose holdings will be greatly diluted at the shareholders' equity price only and at the lowest-ever share price; and Eurocom's special managers.
According to the bid, NIS 800 million of the investment will be used for early repayment to holders of Series C bonds. The remaining NIS 150 million will be added to the company's NIS 700 million in cash, which will be used to fund the company's current activity and for early repayment of its debts to the bondholders.
The bid also includes appointment by Zeevi of a majority of the directors on B Communications board and two members of Bezeq's board of directors.
As he did with his bid for Internet Gold, Zeevi is covering himself with a letter of intent from an AON London insurance broker to prove financial capability. Zeevi's bid is valid until July 30, 2019.
Zeevi is offering to deposit NIS 20 million within seven business days of approval of his bid by the bondholders as a deposit in order to guarantee fulfillment of his commitment. The trustee for the Series C bond series will be entitled to foreclose this amount as sole compensation if Zeevi does not obtain a permit for control of the company, or if he is unable to put up the promised amount of money.
At a meeting of Internet Gold's bondholders last week, Zeevi won the support of only 15% of the bondholders. Most of the bondholders gave a go-ahead for proceeding with the Searchlight fund's bid. The bid now submitted to B Communications could set off a conflict between Internet Gold, the controlling shareholder in B Communications, and the obligation of B Communications' board of directors to safeguard their company's interests.
Published by Globes, Israel business news - en.globes.co.il - on April 21, 2019
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