Cash-flush BGI Investments continues to draw dealmakers like a magnet, with Ilan Ben-Dov its latest catch. Scailex Corporation, the cash-poor controlling owner of Suny Electronic, and Partner Communications have been holding talks with BGI controlling shareholder Zvika Barinboim in an attempt to forge a deal giving Scailex control of BGI's NIS 300 million kitty, TheMarker has learned.
Ben-Dov is thought to be interested in merging his group's Samsung cell phone importing business into BGI, a move that could ease the financial burden of Scailex, Partner's parent company. Scailex owes bondholders and Hutchison Whampoa of Hong Kong NIS 3 billion but can't rollover its debts because of the high yields to maturity of its bonds.
Barinboim, for his part, is titillated by the chance of acquiring a piece of the Samsung importing and marketing business. But approval for such a deal by BGI bondholders is far from certain considering Ben-Dov's reputation as the owner of companies, like Tao Tsuot, that fail to repay their bond liabilities in full. Barinboim has apparently also been approached by other investors interested in BGI's war chest.
Bondholders worried
BGI held a bondholders meeting at its Azrieli Center offices in Tel Aviv on Tuesday. Less than a year ago BGI bondholders meeting in the same offices torpedoed a deal for Barinboim's sale of a 77% controlling stake in BGI's parent, ZBI, to Jacky Ben-Zaken and Avraham Nanikashvili for NIS 128 million. This time the B1 series bondholders requested clarifications on a plan to distribute a special NIS 36 million dividend.
The proposed dividend doesn't comply with a profits test but the company claims the distribution wouldn't lessen its liability repayment capabilities. The dividend's main beneficiary is expected to be ZBI, whose 80% stake in the company would entitle it to payment of roughly NIS 30 million and enable it to make the final NIS 17 million payment on its B4 series bonds in September as its own cupboard is dry.
BGI has NIS 136 million in liabilities on its B1 bonds which are trading at a 9.5% yield to maturity and scheduled for three repayments of principal - in March of 2014, 2015, and 2016. The company also has NIS 65 million in debts to Bank Hapoalim after recently returning NIS 63 million as part of a quid pro quo for the bank approving the dividend distribution.
Based on their previous experience, bondholders expressed their concerns over the proposed dividend distribution, saying it should be rejected as long as their interests aren't secured.
The appointment of a bondholders' delegation seems to be shaping up that will include representatives from the Meitav and IBI investment houses. In advance of a hearing to take place on May 17 in the court's economic department on approving the dividend, the representatives are expected to submit a list of demands to the company. These may include early repayment of part of the bond debt, conditions on any transfer of control, and beefing up bond security.