The question marks surrounding the sale of Partner shares should at least partially disperse tomorrow. This will happen when the Tel Aviv District Court hears the Saban Group’s opposition to the transaction for the sale of Hutchison’s encumbered shares in Partner, which are held by the receiver Adv. Ehud Sol to the Rodev-Gabay Group.
Recall, 27% of the shares of Partner Communications held by Hutchison have been pledged since 2019. For the past two years the receiver has tried to sell the shares, but without success, and now the decision comes to the court which should decide how the shares will be offered for sale. Them and under what conditions.
A sale of Partner shares arose about six months ago after the Apollo Fund took an interest in the deal. But then the Rodev-Gabay group came into the matter, leaving Apollo behind, and remaining the sole factor on the way to completing the deal.
The deal seems to have been paved for the Rodev-Gabay Group, led by former Shlomo Rodev, chairman of Partner, and Avi Gabay, former CEO of Cellcom. But it faces last-minute opposition from the Saban Group, which previously held the same shares. In fact, the Saban Group’s requirement from the receiver is to make a tender for the shares.
If the court decides to accede to Saban’s request, it is difficult to assess who the players who will bid in such a tender will be, and whether the Rodev-Gabay team will remain in the game at all.
Reason 1: Ego and respect
Why is the Saban Group now opposed to the sale of the shares, while it is known that the receiver has been trying to sell them for two years? The main argument is that in the end everything is concentrated on ego matters.
The shares were transferred by the Saban Group in exchange for a loan of $ 300 million that it received from the Chinese Hutchinson Group. The loan was to be repaid in 2019. But then the Saban group decided to return the shares to its hands and not pay the money. From that moment on, the prevailing opinion is that the whole story has become driven by games of honor. After all, the Saban Group itself could have held a tender and sold the shares held by it, or alternatively it may now intend to bid on the shares itself and take over Partner again and therefore want to hold a tender.
Another claim is that the Saban Group believed that they might be able to receive monetary compensation for the return of the shares to Hutchison, and therefore entered into a process of thwarting the deal for the Rodav-Gabay Group. But this claim does not hold water, given that the Saban group knows that the consideration they may receive for the garden is nil. This is because any monetary consideration for the Saban Group will only be accepted if the sale of the shares is made at a very high and unrealistic price.
Either way, to prevent the move, the Saban group argued in court that the receiver should have hired an investment bank and conducted a transparent process for the sale of the shares. On the other hand, the receiver claims that the fact that the shares are offered for sale is known to all and that he had contacts with many parties, and even claims that the Saban group was aware of this and did not raise an outcry in time.
Reason 2: Money? It seems not
Why is the financial consideration in returning Partner shares not the heart of the matter? According to the agreement already reached, the Chinese Hutchison will sell the shares of its partner to Rodev-Gabay for $ 300 million. Although she tried to get a higher amount for the shares, no factor was found that would agree to pay. In fact, Hutchison waives the interest that the debt bore, which is estimated at hundreds of millions of shekels.
In other words, Hutchison says she is interested in ending with Partner and does not want to be part of the communications market in Israel. She is therefore willing to sell the shares, and as soon as possible, to anyone she believes can put the money in and get approval.
The Saban Group’s secured debt, including interest, stands at about NIS 1.3 billion to Hutchison. The receiver explained in his response last week that he is selling the shares to the Rodav-Gabay Group for NIS 950 million, with a full bank guarantee for the entire amount. He explains that, assuming a tender is opened and various bidders submit bids, it is hard to believe that anyone will agree to pay above the price that Hutchison asked.
But even assuming that someone agrees to pay another NIS 100 million – this means that the extra money will also go to Hutchison. Therefore, Saban’s chances of seeing an easy move are very low.
For the Saban group to see money from the story, the value should be over NIS 1.3 billion. According to all estimates in the market, this is an amount that there is no evidence that can be obtained. And Hutchison says the same in her voice, in fact her decision to settle for NIS 950 million.
Reason 3: Delay the procedure
Another important point that the Tel Aviv District Court will be required to address is the question of timing. If it is decided that a tender should be held for the sale of the shares, it means that groups will have to go through a process of due diligence, submit bids for a lot of money and provide guarantees for this – all of these are not things that are done within a day or two.
Such a process may delay the deal that Hutchison is willing to make immediately with Rodev-Debay, so she seeks a guarantee for damages that may be caused to her if the deal is not realized.