Elsztain bids NIS 1.07b for Eurocom

Eduardo Elsztain  photo: Eyal Izhar
Eduardo Elsztain photo: Eyal Izhar

The Antitrust Authority will allow Discount Investment to complete the first part of the deal before selling Cellcom.

Discount Investment Corporation (TASE: DISI), controlled by Eduardo Elsztain, is back to competing for the acquisition of control in Eurocom Group. Sources inform "Globes" that the company today obtained clarifications from the Antitrust Authority, according to which it will be allowed to go ahead with the first stage of the acquisition deal for Eurocom before selling its control of Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). Following these clarifications, Discount Investment is submitting a binding bid to acquire control of Eurocom.

Discount Investment last week announced its plan for a settlement in Eurocom, controlled by Shaul Elovitch.

The bid indicates that Elsztain is willing to pay NIS 1.07 billion in cash - a higher cash component than in the bid by Naty Saidoff, currently the main bidder. Elsztain is offering to acquire 37.5% of Midtown project and 15.3% of Enlight Renewable Energy Solutions Ltd. (TASE:ENLT) for NIS 300 million. The acquisition of Midtown will lead to the repayment of most of the debt to Eurocom Real Estate's creditors. According to the bid, repayment of the remaining NIS 80 million of the consortium's debt from Eurocom Real Estate will be deferred to the end of the year.

Elsztain is also offering to acquire Eurocom Group's private operations companies, some of which suffer from financial difficulties, for NIS 75 million. This injection is designed to solve the companies' liquidity problems.

In the second stage, Elsztain is offering to pay NIS 700 million for the acquisition of Eurcom Communications, the controlling shareholder in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ). This deal will be implemented within six months of the arrangement, subject to IDB Development selling Cellcom. Eurocom Communications' remaining NIS 450 million debt will be written off, leaving the company with no debt. At the same time, IDB Developing is offering an upside mechanism under which, subject to a return on the assets in five years, the creditor banks will receive an additional payment.

Last week, it appeared that Discount Investments was backing away from the acquisition of control in Eurocom after receiving a clarification letter from the Antitrust Authority about the requirement for selling Cellcom before an "affinity" is formed with Bezeq. It seems, however, that Discount Investment has reached understandings with the Antitrust Authority allowing it to continue conducting negotiations and trying to reach agreements with the creditor banks in Eurocom - Israel Discount Bank (TASE: DSCT), Bank Hapoalim (TASE: POLI), and First International Bank of Israel (TASE: FTIN) - and a consortium of creditors in Eurocom Real Estate, headed by Mizrahi Tefahot Bank (TASE:MZTF). Eurocom Group's debts are in excess of NIS 1.5 billion.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 5, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Eduardo Elsztain  photo: Eyal Izhar
Eduardo Elsztain photo: Eyal Izhar
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