The Neuman brothers are not alone in their quest to acquire Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ). Sources inform "Globes" that Ron Lauder's US investment fund Searchlight Capital Partners filed a bid to Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) to acquire control of Bezeq nearly two weeks ago. It is believed that the bid is on a similar scale as the Neuman Brothers' bid for shares in B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM), the company that holds the controlling interest in Bezeq, at a NIS 1 billion company value, a 30% premium on the current market price.
At the same time, while the Neuman brothers are willing to buy the company without due diligence, the fund is asking for a few weeks to carry out a relatively brief due diligence procedure for the company, only after which will its bid become binding. The sources added that the fund was previously interested in acquiring Bezeq, and held talks on the matter a year ago with representatives of the Elovitch family, the previous controlling shareholder in "Globes."
Searchlight is a global investment fund with offices in New York, Toronto, and London. The group invests in a limited number of sectors, including communications and media. The group's funds have made investments in communication companies in the US, Italy, and Spain, among others. In addition, the group is making investments in the consumer sector, financial services, and education. The group describes itself as a fund making long-term strategic investments. Searchlight also has activity as a passive investor in which it calls, "opportunity funds."
Despite the bid, Internet Gold, managed by CEO Doron Turgeman, preferred a deal with the Neuman brothers for several reasons. First of all, the Neuman brothers' bid is available and immediate and does not depend on due diligence. Secondly, obtaining permit for control of Bezeq is likely to be easier and quicker for the Neuman brothers, who are Israelis, than for a foreign fund, which will probably have to take on an Israeli partner in order to obtain a control permit.
Battle of the board
Meanwhile, the special managers of Eurocom, the lawyers of the company's creditor banks, are continuing their struggle to prevent the deal to sell B Communications to the Neuman brothers. The special managers, Adv. Pinhas Rubin, Adv. Amnon Lorch, and Adv. Ori Gaon, petitioned the court for a restraining order against the sale of B Communications. Tel Aviv District Court Judge Iris Lushi-Abudi, who is hearing the case in the absence of Judge Eitan Orenstein, ruled that the Neuman brothers would be added as a party to the petition and that the Neuman Brothers, Internet Gold, and the official receivers would present their arguments about the order by Wednesday at noon.
The banks, however, are not stopping there. Today, they also replaced some part of Internet Gold's board of directors and obtained an initial foothold in it. Adv. Gilead Sher and Adv. Yahel Shachar entered the board of directors on behalf of the banks, replacing the representatives of Shaul Elovitch, the previous controlling shareholder: Yossi Elovitch and former Eurocom CFO Felix Cohen.
The board of directors was to have approved the sale to the Neuman brothers today, while the new directors planned to prevent this at the meeting, but approval was prevented by the temporary restraining order issued by the judge.
This, however, was not the end of the struggle for Internet Gold's board of directors. The banks want to put three more of their representatives on the board of directors, which will give them a majority, while Internet Gold is opposing expanding its board of directors to nine members. A court hearing on the matter is scheduled on Wednesday.
The creditor banks of Eurocom - Israel Discount Bank (TASE: DSCT), Bank Hapoalim (TASE: POLI), and First International Bank of Israel (TASE: FTIN) - are opposing the sale of B Communications to the Neuman brothers because they prefer an organized tender instead of jumping at the first bid. This attitude is because only a week ago, they injected NIS 50 million into Internet Gold as part of its offering for the purpose of stabilizing it financially and conducting an organized sale process without pressure from Internet Gold's bondholders.
Published by Globes [online], Israel business news - www.globes-online.com - on June 18, 2018
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