The unexpected postponement of the bond offering by Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) during the institutional tender, despite very high demand, was as far as is known due to instructions by its legal advisors. The Israeli mobile operator had planned to raise NIS 400 million in bonds that had been rated A+. Cellcom did not disclose the legal reasons for halting the bond offering but market sources believe that it was linked to progress in the sale of Golan Telecom Ltd. and information that might be revealed to those participating in the bond offering. Others believe that Cellcom will continue with the bond offering as planned as soon as it can.
Two days before the bond offering, "Globes" reported last week that there were two groups interested in acquiring Michael Golan's Golan Telecom: a group led by former Pelephone Communications Ltd. CEO Gil Sharon, and 018 Xfone Inc. (AMEX:XFN; TASE:XFN) owner Hezi Bezalel. Following "Globes" report Cellcom notified the Tel Aviv Stock Exchange (TASE) that it had permitted Golan Telecom to talk to the two groups. Under the terms of the agreement by which Cellcom agreed to purchase Golan Telecom (an acquisition that did not meet with approval from the Israel Antitrust Authority and Ministry of Communications), there was a no-shop clause preventing Golan from entering talks with potential buyers before November. The acquisition of Golan Telecom is being led by Rothschild Bank.
Any sale of Golan Telecom would be a positive development for Cellcom. The rival groups bidding for Golan, as reported by "Globes" are in network sharing talks with Cellcom, and this is likely an integral part of the deal. Another matter with an unclear outcome is what will happen regarding Golan's NIS 600 million debt to Cellcom. Any sale deal for Golan will have to take this debt into account.
Two months ago the Ministry of Communications also nixed a network sharing agreement between Golan Telecom and Hot Mobile, which would have transformed Golan into an MVNO. Such a development would have been problematic because Cellcom had filed for an order against it and because the licenses of both Golan and Hot prohibited such a move.
Published by Globes [online], Israel business news - www.globes-online.com - on September 19, 2016
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