Searchlight Capital Partners has raised its bid for the controlling stake in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ). The US-based fund, which seeks to buy the holdings of Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) in B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM), which controls Bezeq, has made a "last and final" offer of NIS 20 per B Communications share, which compares with NIS 17 in the previous offer, and an upside mechanism worth up to an additional NIS 8 per share.
The price that Searchlight is now offering represents a premium of NIS 23.3% on B Communications' market price. Internet Gold holds 52% of B Communications, worth NIS 387 million at the offer price. It seems that Searchlight is very keen on the deal, because despite that fact that it has said in the past that it will not raise its offer, in practice it has behaved differently. The fund is not even asking for further due diligence examinations, other than access to the appendix to the 2015 loan agreement between Bezeq and Israel Discount Bank (TASE: DSCT). The offer will lapse on March 8, unless the sides sign an exclusive negotiations agreement.
The current scenario, taking into account Internet Gold's cash, represents a haircut of 26.6% of its debt, which amounts to NIS 722 million. It will be recalled that Internet Gold has in effect passed to the control of its creditors, after the company announced that it was halting payments to its bondholders after the failure of the auction for the sale of its B Communications shares, in which Searchlight was a participant.
The preconditions for completion of the deal presented by Searchlight today are the receipt of a control permit without any onerous condition attached that will have a material negative impact on the fund after completion of the deal; antitrust approvals; appointment of most of the B Communications board of directors and at least two seats on the board of Bezeq; no delisting or suspension from trading of shares in B Communications or Bezeq; approvals from the court and the creditors; and that B Communications will have cash of more than NIS 420 million and no more than NIS 2.24 billion debt at the end of June 2019. Searchlight is also demanding that there should be no negative change caused by, among other things, breach or expected breach of B Communications' debt agreements.
Published by Globes, Israel business news - en.globes.co.il - on March 3, 2019
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