This morning, Searchlight Capital Partners published an amended offer to the bondholders in B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM), the parent company of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), following understandings it reached yesterday with the bondholders' representative body and with B Communications parent company Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD). The updated proposal will be brought for discussion before a meeting of B Communications C series bondholders today. It will then be voted on, and is expected to receive wide support.
Bezeq's share price is currently up by more than 4%.
Under the proposed deal, Searchlight will invest NIS 260 million in B Communications on the closing date in exchange for an allocation of shares. At the same time, B Communications will offer shares worth NIS 70 million to its existing shareholders, proportionate to each shareholders holding, on terms identical to those in Searchlight's proposal. Thus current controlling shareholder Internet Gold will invest NIS 35 million in B Communications, and NIS 35 million will come from the minority shareholders, with Searchlight undertaking to stand in place of the minority shareholders, wholly or in part, to the extent that they do not rush to inject money into the company.
The share price in the allocation will be the lower of NIS 4.8 and a price representing a 25% discount on the weighted average of the share price in the previous 30 trading days.
At the same time, Searchlight will pay a further NIS 225 million to Internet Gold in exchange for all of the B Communications shares it currently holds (19.363 million shares). Internet Gold itself will also invest a further NIS 310 million against an allocation of B Communications C series bonds redeemable in November 2024.
B Communications will use the cash it receives to repay debts of NIS 840 million it owes to its existing bondholders.
The breakthrough in the negotiations in the past two days and Searchlight's new offer were made possible by Internet Gold's agreement to invest in B Communications its receipts from the deal, amounting to NIS 225 million, and a further NIS 115 million of its cash, facilitating early repayment of nearly 30% of the amount owed to the C series bondholders in B Communications and immediate, full repayment to the B series bondholders.
Following the deal, Internet Gold will become a company owning NIS 310 million worth of B Communications C series bonds, 30 million B Communications shares, and NIS 20 million cash.
B Communications is recognized as the controlling shareholder in Bezeq, with a current holding of 26.3 million shares. Thus once the deal is completed, Searchlight will become Bezeq's new controlling shareholder - subject to receiving a permit from the Ministry of Communications - while Internet Gold will retain exposure to Bezeq through its new investment in B Communications.
In the negotiations conducted over the past two days, Searchlight was represented by Adv. Ehud Sol and Adv. Ilanit Landesman of Herzog Fox Neeman and by investment banker Tomer Raved of Royal Bank of Canada. Internet Gold was represented by its CEO Doron Turgeman, while the B Communications bondholders were represented by the trustee and Ofer Gazit CPA.
Published by Globes, Israel business news - en.globes.co.il - on May 14, 2019
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