Bezeq shares continued their plunge today, posting a 3.5% decline to reach NIS 4.80. The fall of Bezeq’s share price poses a problem for Gad Zeevi, who holds 19.2% of the company. The company’s current market value is $510 million, 30% less than Zeevi’s commitments for the shares.
The developments strengthened capital market assessments that the banks that granted Zeevi credit for buying the Bezeq shares are acting to sell the shares. It is believed that parties showing an interest in the share package include Shrem-Fudim-Kelner, through Poalim Investments, and Lev Leviev, the controlling shareholder of Africa-Israel. Spokesmen for the two groups denied reports they had recently negotiated to acquire Gad Zeevi’s Bezeq shares.
A source close to one of the two groups said that the gap between the market price of the shares and the amount being asked for them is preventing a deal from being inked, principally because of the uncertainty prevailing in the financial markets in general and Bezeq’s privatization in particular.
Zeevi bought his shares in Bezeq from British communications company Cable and Wireless in October 1999 for $630 million. He later took an additional $90 million in credit. The bank consortium that financed the share purchase included Bank Hapoalim, Bank Leumi, Israel Discount Bank, United Mizrahi Bank, and The First International Bank of Israel. For his part, Zeevi put up $150 million in guarantees given him by Mikhael Chernoy.
Published by Israel's Business Arena on September 20, 2001