Hutchison execs in Israel seeking Partner control permit

Amikam Cohen  / Photo: Eyal Izhar, Globes

US administration pressure on Israel to restrict trade relations with China raises concern that Hutchison will have difficulty in obtaining a permit to control the telecom company.

Representatives of Hong Kong-based Hutchison arrived in Israel today for meetings in the Ministry of Communications as part of the company's preparation for reassuming control of Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), sources inform "Globes." The shares reverted to Hutchison after US-Israeli billionaire Haim Saban announced that he was giving up the controlling interest in the mobile phone company. Hutchison must now prepare for the possibility of receiving the shares, and therefore needs a control permit from the Ministry of Communications.

Hutchison operates in Israel in water desalination, activity that is managed by Amikam Cohen and Dan Eldar, who worked with Cohen in Partner as VP operators connections and international connections.

The return to Israel by Hutchison, which founded Partner, is not straightforward, because it is a company with origins in Hong Kong. Hutchison was already the controlling shareholder in Partner in the past, but the decline in trade relations between China and the US and the fact that the US administration is exerting pressure on Israel to restrict its relations with China are arousing concern that Hutchison will have difficulty in obtaining a permit to control the company.

Hutchison is legally required to accept the shares, even if it sells them to another concern and does not remain as an investor in Israel. In other words, Saban's shares have to go somewhere, so Hutchison either needs a control permit, or someone will have to hold the shares on its behalf until the question of the control permit is solved. In this situation, it is possible that the shares will be given to a trustee, who will hold them until Hutchison gets the permit or decides to sell the shares through the trustee.

Some assert that the company regards the current situation as an opportunity. Given its experience in 5G cellular, it will want to remain and sell the shares after the market recovers, because as of now, it appears that control of the company is in any case returning to Hutchison by getting the shares without having to pay for them.

Saban announced that he was returning the 30% controlling interest in Partner to Hutchison, in view of the losses it accumulated since he acquired Partner in 2013, and the fact that there is no reason for him to repay in January a $300 million loan that he received from Hutchison, with the controlling shares serving as collateral. The market value of the shares that Saban holds, attached to ensure payment of the debt, is a mere NIS 730 million.

The debt that Saban owes is due for payment in January 2020, and in recent months, he negotiated a rescheduling of the loan with Hutchison. According to reports two weeks ago, however, these negotiations ended without results, thereby giving Hutchison an opening to reassume control of Partner. According to the Saban group's report to the Tel Aviv Stock Exchange, the negotiations with Hutchison have been concluded, and the two sides are unlikely to reach an agreement at this stage, "and the lenders can exercise their rights."

Published by Globes, Israel business news - en.globes.co.il - on October 6, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Amikam Cohen  / Photo: Eyal Izhar, Globes
Amikam Cohen / Photo: Eyal Izhar, Globes
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