The great unknown that will determine the fate of Ilan Ben-Dov's Scailex Corporation (TASE: SCIX; Pink Sheets:SCIXF) the tie with South Korean mobile handset manufacturer Samsung became clearer yesterday, and not in a way that bodes well for the company.
It looks as though the aim of Yaakov Luxembourg, the main creditor of Scailex and of its parent company Suny Electronics Ltd. (TASE: SUNY), to keep the company as a going concern, has become harder to achieve, and the pyramid that Ben-Dov built seems to be on the verge of liquidation.
Scailex reported yesterday that Samsung had demanded immediate repayment of unsecured open credit of $5.2 million, the repayment date of which has passed, as a primary condition for doing further business with it, including full supply of handsets (Scailex holds the franchise for supply to independent stores). Scailex has an additional debt to Samsung of $6.1 million, due for repayment during July. (Its total debt to Samsung is some NIS 38 million.)
At the same time, Scailex reported that the bank that finances its day-to-day activity, Mizrahi Tefahot Bank (TASE:MZTF), did not extend the line of credit provided to the company. The credit line expired yesterday. Scailex approached Mizrahi Tefahot in connection with payment of the open credit from Samsung, "but so far Mizrahi has not approved this request," the company said.
On June 19, Samsung warned Scailex that "if the open credit is not repaid within 30 days, this will give Samsung the right to cancel the agreement between the parties." In other words, the franchise to distribute Samsung handsets will be taken away from Scailex.
Towards the end of its notice to the stock exchange, Scailex states the obvious: "In the event of failure to reach understandings with Samsung, there will be a material adverse effect on the company's business, on its forecast cash flow, on the fair value of it activity, and on its solvency."
Published by Globes [online], Israel business news - www.globes-online.com - on July 2, 2014
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