Creditors Seek Control of Samsung Cellphone Distributor in Israel

Urgent meeting to oust Scailex's controlling shareholder Ilan Ben-Dov expected soon.

Bloomberg

Bondholders of Scailex, the company that holds a major stake in Partner Communications and distributes Samsung cellphones in Israel, are seeking to oust Ilan Ben-Dov as its controlling shareholder.

The bondholders, led by Yaacov Luxemburg, said yesterday they would seek to convert their debt into equity after Scailex said in its first-quarter financial report that it would seek to renegotiate terms for its series Zion, Het, Tav and 1 bonds. The request comes only five months after Ben-Dov had previously reached terms with them.

“Today Ben-Dov as controlling shareholder is destroying value rather than adding to it,” the bondholders said in a statement.

On top of Ben-Dov’s problems with bondholders, Samsung is raising objections about its long-standing distribution agreement with Scailex that could lead it to end the contract. Ben-Dov has argued that his personal ties with Samsung has kept the relationship intact.

“We will be calling an urgent general bondholders meeting with the aim of commencing the process of removing Ben-Dov from control of the company,” the bondholders said. “Part of that process will entail concerting bonds into shares and restoring relations with Samsung.”

It was Ben-Dov’s success with Samsung over the year that earned him a fortune that he used in 2009 to buy control of Partner in a leveraged buyout. Three years later he sold control of Partner to media mogul Haim Saban, although Ben-Dov retains a 12% stake.

Shares of Scailex, which had debt of 955 million shekels ($275 million) at the end of March, plunged 28% in Tel Aviv to end at 1.07 shekels.

Ofer Vaknin