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The Government Companies Authority published an offer to sell 5.25 percent of state-run phone company Bezeq at 4:00 P.M. Wednesday. Trade in the share was immediately suspended, an hour before the exchange floor closed.

It will resume Thursday morning after the state publishes the results of the NIS 600 million tender and the identity of the winning bidder. The 130 million shares being sold this morning will be the largest block trade ever on the Tel Aviv Stock Exchange.

The GCA offer was sent to 25 major institutional investors including foreign investment banks operating in Israel, underwriters and brokers. After the block sells, the state's stake in the company will fall from 52.7 percent to below the 50 percent level and Bezeq will cease to be a government corporation. This dramatic change for Bezeq will free it - as a "mixed" status company - from many restrictions.

It will be free to exercise an option to buy 50 percent of cellular provider Pele-Phone from the Disney family investment arm, Shamrock Holdings, plus an option on another 5 percent of the multichannel satellite television provider Yes.

The tender will close at 7:00 A.M. Thursday morning, when the bids are faxed to GCA director general Eyal Gabbai's office. Bidders were given a fifteen minute window to make their bids. The office will be locked and only members of the state holdings sale committee will be present, to prevent information leaks on the bidders or their offers.

The winning bid will come from the investor who offers the highest price per share. The winning bidder will also receive an option on another 30 million shares - about 1 percent of the national phone monopoly - at the same price. A decision to exercise the option must be announced by 6:00 P.M. Thursday.

In addition, the state will grant the investor options on more shares to be exercised over the coming 90-day period, but the per share price for those options will be negotiated. GCA undertook not to sell shares during those ninety days with the exception of on the exchange floor via the publication of a prospectus should it manage to do so.

Bezeq was trading at NIS 4.725 Wednesday afternoon before the tender was announced. Three months ago the state sold 3.5 percent of the phone company to Gmul for NIS 375 million, 5.9 percent below Bezeq's market price at the time.

After the state sells the block Thursday morning and drops to a 47.5 percent interest, Bezeq will immediately allocate shares that will boost the state back to 49.5 percent. The allocation is to enable the state to finance employee retirement plans. The state has agreed to inject NIS 890 million, meaning that after the NIS 375 million, another NIS 515 million is forthcoming.

Bezeq chair Miriam Mazar and CEO Amnon Dick on Wednesday praised the tender because it will remove company's government corporation status, a critical step toward privatization.