The Bank of Israel has approved in principle a merger arrangement for the cable companies, based on obtaining guarantees from foreign banks, thereby solving the single borrower and group of borrowers restrictions. Sources inform ''Globes'' that, as a result of this approval, teams from Israel’s three cable companies - Matav-Cable Systems Media Ltd. (Nasdaq: MATV; TASE:MATV), International Television Holdings (Tevel) and Golden Channels - have begun working towards a merger agreement to be signed by the end of the year. Four teams have been set up: legal, accounts and taxes, regulations, and operations.
Following the decision to merger the three cable companies, Tevel special manager on behalf of the banks, Zvi Yochman CPA has called off the tender for the sale of Tevel, although the tender might still go forward in the near future.
Ownership of the merged cable company will be based the holdings of each of the cable companies’ shareholders, as follows: the banks - 42%; Yediot Ahronot Ltd. - 16-17%; Fishman Holdings - 15-16%; and Yitzhak Tshuva’s Delek Group Ltd. (TASE: DLEKG) - 11%. The public and small shareholders will own the rest.
The cable companies currently have an aggregate 940,000 subscribers. A merger is intended to reduce their per-subscriber debt to $600-800, a total of $570-750 million. Foreign banks are expected to guarantee a quarter of this debt, the amount that satisfies the Bank of Israel.
The cable companies intend for their shareholders to sign a merger agreement by year-end, but plan to defer completing the actual merger because of lengthy procedures, including approval of the companies and the regulators, courts, and banks.
No change in the ownership of the cable companies is expected until the merger is completed. In other words, there will be no acquisition or merger with a communications company, in particular with a wireless operator.
Eliezer Fishman is the controlling shareholder in “Globes”.
Published by Globes [online], Israel business news - www.globes.co.il - on November 13, 2005