This morning, Suny Electronics Ltd. (TASE: SUNY), controlled by Ilan Ben-Dov, confirmed reports circulating yesterday evening that the company was in advanced negotiations with Hutchison Telecommunications International Ltd. (NYSE: HTX; HKSE: 2332).of Hong Kong on a deal under which Hutchison will buy control of Scailex Corporation (TASE: SCIX; Pink Sheets:SCIXF), and thus indirectly buy control of mobile carrier Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR)), from Suny.
Under the proposed deal, Hutchison will acquire the controlling interest in Scailex from parent company Suny.
Ben Dov acquired the 51.3% controlling interest in Partner from Hutchison Telecommunications in 2009 for $1.38 billion, financed in part by a seller's loan from Hutchison. Partner had a market cap at the time of $2.7 billion.
Scailex adds, that as part of the deal, Suny will acquire the Samsung mobile phone import and marketing business from Suny.
Scailex adds the caveat that "at the time of this report no binding agreement has been signed, and there is no certainty that such an agreement will be signed."
Meanwhile, Suny reported last night that, last Thursday, the company's board approved taking a loan of NIS 30,000 from Ben-Dov "to cover urgent current expenses of the company". This follows notification to Suny by Bank Leumi (TASE: LUMI) on May 24 that it must act immediately to bring the collateral for its debt to the bank up to the required level, or else the bank will demand immediate repayment of the debt and realize the shares on which it holds a lien. The balance of Bank Leumi's loan to Suny is NIS 27.2 million, against which it has a lien on 2,173,126 Partner shares, which are currently worth NIS 39.3 million, giving a debt to collateral ratio of 144.5%.
The media reported yesterday that Scailex and Suny had been in negotiations with Hutchison for several days, and that, last week, Ben Dov met Amikam Cohen and Dan Eldar, Hutchison's representatives in Israel, to examine various possibilities that might enable Ben Dov to repay the outstanding debt $300 million that Hutchison lent Scailex when it bought the controlling interest in Partner from it in 2009. The consequence of the deal that is the subject of the talks, if it goes through, is that Ben Dov will relinquish control of Partner.
Ten weeks ago, Hutchison's Israeli representatives denied market rumors that the company wanted to again become a major shareholder in Partner in exchange for the seller's loan, which Ben Dov is due to repay in 2014.
Ben Dov owns 71.3% of Suny, which owns 78.7% of Scailex, which owns 44.5% of Partner.
The Tel Aviv Stock Exchange (TASE) suspended trading in the shares of Partner, Scailex, and Suny. Partner's share price fell 2.3% on Nasdaq on Friday to $4.49, giving a market cap of $699 million.
Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2012
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