Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) today announced that no bids had been submitted yesterday in the auction for the acquisition of B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM), and that the company would probably seek a debt arrangement. Trading in the shares of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), Internet Gold, and B Communications was halted, and will be resumed at 10:07 AM. Internet Gold's board of directors is currently meeting to decide on further measures.
The two funds expected to bid for the acquisition of B Communications apparently decided against it. The bids received for B Communications were substantially less than the company's debt.
Internet Gold holds a 65% controlling interest in B Communications, which controls Bezeq with a 26% stake. Bezeq's subsidiaries include Pelephone Communications Ltd., Bezeq International, and Yes (DBS Satellite Services).
Searchlight filed a non-binding bid
One indication was filed by one concern, believed to be Searchlight Capital Partners. in the auction. The bid, which does not cover B Communications' entire NIS 600 million debt, is higher than the debt's market value, and is probably slightly higher than the NIS 400 million value of the company's shares. Accepting this bid will mean that Internet Gold's bondholders will have to write off NIS 160-180 million.
It is fairly clear from the report that Internet Gold's board of directors will decide tomorrow to either continue negotiations with the bondholders, and in effect will offer its help in conducting the process in the future, or to hand the company over to the bondholders. A conflict or a controlling shareholder conducting a struggle against the bondholders will definitely not occur, and it is difficult to imagine Internet Gold's CEO Doron Turgeman opposing the bondholders, whom he has supported up until now. It is therefore believed that the bondholders will have two options tomorrow: allowing the current management and board of directors to continue negotiations or taking control of the company and starting a new process that will take time and could result in higher proceeds, but which will also incur the risk of a further decline in Bezeq's share price.
Sources also inform "Globes" that Internet Gold's bondholders are very angry at a Ministry of Communications senior deputy director general, who criticized Bezeq while the auction was taking place and promised to fight the company to the end. Some of the bondholders demanded legal action against him. At the same time, senior figures in the banks that control Internet Gold claim that the timing of a large proportion of the write-downs and provisions made by Bezeq in the current situation was deliberate. It seems that the banks believe that Bezeq's board of directors prefers operating the company without a new controlling shareholder.
Published by Globes, Israel business news - en.globes.co.il - on January 16, 2019
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