Following agreements between Searchlight and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), with mediation by representatives of B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM) bondholders, the deal for the sale of control in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) is now set to be signed.
Searchight's demand for at least NIS 685 million in Harel's treasury was reduced to NIS 680 million, and will not include legal costs relating to various lawsuits against the company. On the other hand, Altshuler Shaham investment house announced that it opposed lowering the required majority to 70%. This opposition, however, is not preventing the signing of the agreement, since Harel is satisfied.
A vote earlier today failed to approve the bid by Searchlight and David Fuhrer because of opposition by Harel and Altshuler Shaham. 70.06% of the votes not classified as parties at interest were in favor, short of the required 75% majority. Harel has now agreed to lower the voting percentage to 69.77% and to the signing of the contract with Searchlight.
Harel and Altshuler Shaham hold 30% of the voting rights in B Communications Series C bonds. Most of Harel's objections to Searchlight's bid concern the lien in favor of the Series C bondholders on the 26.34% of Bezeq's shares owned by B Communications after completion of the debt settlement. Harel demanded that the settlement state that the interest rate for the Series C bonds would be raised by 0.5% from its current level until Searchlight obtains approval from the Ministry of Communications for attaching Bezeq shares in favor of the B Communications bondholders. Searchlight opposed this demand.
Searchlight agreed to make a "reasonable effort" to obtain the lien, but this phrase did not satisfy Yoni Sher, Harel's consultant, who recommended opposing the deal. Searchlight initially said that it could not commit to anything more, because the matter was subject to the Ministry of Communications' judgment, but Harel did not accept this explanation, and voted against the deal.
At the same time, sources inform "Globes" that a number of developments in the past 24 hours contributed to changing the decision. Among other things, the management of B Communications notified Harel that the Ministry of Communications director general had told it that there was no barrier in principle to obtaining permission for the lien, subject, of course, to filing a request in accordance with the Telecommunications Law and the Wireless Telegraph Ordinance, and to a recommendation by the relevant security agencies.
B Communication's management again made it clear that the Ministry of Communications had previously made no objection to a lien on these shares. Among other things, the shares were attached when the Apax-Saban-Arkin group held control of Bezeq. Another time, B Communications itself obtained permission to attach the Bezeq shares in favor of international investment institutions in order to secure bonds issued to them, which were later redeemed.
Harel said that the agreements were reached after B Communications accepted its demands. "According to B Communications' notice to Harel, Searchlight agreed to revise the liquidity clause, as discussed by the parties, and said that it was willing to consider solutions for the problem of registering the lien. Harel consents to revise the voting percentage to 69.77% and to the signing of the contract with Searchlight. Harel reserves its right to vote in accordance with its judgment at the bondholders' meeting, which will be convened under Section 350 of the Companies Law."
Published by Globes, Israel business news - en.globes.co.il - on June 20, 2019
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