Throughout the world, and not only in Israel, it is very hard to find deals on the scale of Partner Communications Co. Ltd. (Nasdaq: PTNR; TASE:PTNR; LSE:PCCD). Deals with a market cap $2.6 billion or more are considered relatively large especially with the small number of deals taking place during the global financial crisis. The buyers will need to spend $1.3 billion to acquire the controlling stake of over 50% and of course they will look for quick ways of recouping their investment.
For this reason rating company Standard & Poor's Maalot Ltd. has reclassified the credit rating of Partner's debt from AA to "Developing." Clearly whoever buys the company will need to implement a capital impairment in order to continue one-time dividends to finance the purchase.
Partner's shareholders' equity stands at NIS 1.8 billion and the scale of the reduction is valued at NIS 1.5 billion, so that while the reduction is not expected to harm the company, it is extremely substantive and will significantly change Partner's capital structure.
In any event, the change in control at Partner will have one clear consequence: the capital structure of the company will be leveraged substantially.
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2009
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