Shareholders in fiber-optic venture Unlimited are being asked to put over NIS 500 million into it as follow-up investments in order to hook tens of thousands of customers up to the venture in 2016-2017 in an effort to save it, according to discussions in the company and among its shareholders.
Sources inform "Globes" that, as part of the process, Israel Electric Corporation (IEC) (TASE: ELEC.B22) is being asked to inject money into the venture, while IEC is making the money contingent on an examination of the review that was presented to it by Unlimited CEO Danny Lauber.
IEC representatives on the Unlimited board of directors have already objected to the plan presented to them in the Unlimited board meeting. The plan was presented this week to the business development committee of the IEC board. The problem is that IEC is barred from putting money into Unlimited. It owes its 40% stake in the venture to Unlimited's use of IEC infrastructure. A decision to inject money requires a government decision, and in view of IEC's financial situation, it is by no means sure that the Government Companies Authority and the Ministry of Finance will support such a request. This is also the reason that another opinion is being requested about the work presented.
IEC chairman Yiftah Ron-Tal ordered that Prof. Haim Ben-Shahar and Prof. Asher Blass should be appointed to conduct the inquiry.
Ron-Tal made it clear that money would not be given to the venture without an examination of the plan, and he was willing to take this step only if it was clear beyond doubt that the plan was feasible, and could save the venture. Ron-Tal severely criticized what happened in the venture during the past year, and how it was being managed. He also made it clear that as far as he was concerned, there would be no venture without a radical change in its business plan and a reopening of the agreements between the shareholders, in addition to strong regulatory action to require the local authorities to allow the venture to deploy infrastructure in the cities. Several mayors have halted deployment of the infrastructure in their jurisdictions.
The dispute about the plan concerns disagreements between Unlimited and consultant company Giza, which prepared it. Sources involved in the matter said that Giza was objecting to the figures that Unlimited was putting into the plan; in other words, the two sides disagree about the company's strategy, leading Giza to disavow the plan. In such a situation, it is natural for shareholders, and not only IEC, to view the plan skeptically, and the chances that the shareholders, especially the Israeli ones, will agree to inject more money are low.
Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2015
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