Communications company Partner completed the stage for institutions in its share offering late last week, raising NIS 276 million. The company planned to raise NIS 250 million, but the offering was oversubscribed by 50%, with demand totaling NIS 370 million. The share price in the offering was NIS 15, 2% higher than Thursday's closing price on the Tel Aviv Stock Exchange (TASE). 18.3 million new shares were issued in the auction.
Partner is scheduled to offer shares to the public in the next few days, although it is believed that the public offering will not add much to amount raised. The size of the financing round will increase however, because Partner will offer shares to "Israeli parties." The Ministry of Communications requires that at least 5% of the issued and paid-in capital of communications companies be held by Israeli parties (as defined in their license).
In order to avoid diluting the existing holdings of its Israeli shareholders, Partner will offer them shares for NIS 10.5 million in a private placement to parties meeting the definition at a 25% discount on the price in the offering, i.e. at NIS 11.25 a share, because these shares are less marketable. This share allocation will increase the amount raised by Partner to NIS 286.5 million, not including the public offering.
When the process is completed, the holdings of shareholders who did not participate in the offering will be diluted by 10%; the controlling stake in Partner will then become 27%, instead of 30% before the offering. The controlling interest held by the Saban group, headed by businessperson Haim Saban, is currently in receivership, and will be transferred to former Partner controlling shareholder Hutchison, to which the Saban group owes $300 million.
The proceeds will not be used to reduce the debt
The debt consists of a loan granted by Hutchison to Ilan Ben-Dov, when he acquired control of Partner from the company. He later sold the controlling interest to Saban, including the loan. The debt was scheduled for repayment in January 2020, and the Partner shares were attached to secure it, but their current value is substantially less than the debt. Saban therefore recently waived its control of the company, in effect giving it back to Hutchison, subject to the latter obtaining a control permit from the Ministry of Communications. As reported by "Globes," Hutchison did not like the current offering, but nevertheless approved it. Hutchison would probably have preferred delaying the offering until the question of the control permit was clarified.
The money raised in the offering is slated to support Partner's growth engines and strengthen the company ahead of the 5G tender, in addition to preparing for possible mergers and acquisitions in the telecommunications market, if and when these occur. There are no plans to use the money to reduce Partner's debt, which amounted to NIS 1.6 billion at the end of the third quarter, most of it consisting of long-term debt. The company's net debt was NIS 956 million.
Several weeks ago, Partner competitor Cellcom raised NIS 312 million gross in a TASE offering, with half of the money coming from Discount Investment Corporation, its controlling shareholder, in which Eduardo Elsztain holds a controlling interest. The offering was part of Cellcom's restructuring measures.
Discount Capital and Poalim IBI led Partner's offering, with legal advice from the Agmon & Co. Rosenberg Hacohen & Co. law firm.
Published by Globes, Israel business news - en.globes.co.il - on January 6, 2020
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