Gad Zeevi is back again after a 20-year hiatus with a new offer to buy control of Bezeq, Israel’s largest but financially struggling telecommunications company. Zeevi, now 80, said on Monday that his company Trimag Communications International was ready to spend 300 million shekels ($83.8 million) to gain control of Bezeq by buying its parent company, Internet Gold. The offer remains in force for up to eight days.
Zeevi sought to buy Bezeq in 1999 at a time when the company was thriving, but he was dealing at the time with an indictment that prevented him from getting a license from the Communications Ministry. Zeevi was eventually exonerated.
Bezeq went through a series of controlling shareholders, the last of whom was Shaul Elovitch’s, who was forced to cede control amid police and securities probes and mounting debt. The result is that Zeevi could win his prize for a mere 300 million shekels.
The news of Zeevi’s offer came as Bezeq itself said its board had decided against expanding its share capital, a move that was being examined ahead of a possible capital raise through a rights issue. A statement to the Tel Aviv Stock Exchange said the board made its decision after consulting with shareholders.
Bezeq has to raise new capital after a major write-down at its Yes satellite business in the fourth quarter, but the move would dilute existing shareholders of their stakes unless they fully subscribe to the rights offering.
The two developments lifted shares and bonds of the Bezeq group, which have been sinking amid the group’s multiple problems. Internet Gold bonds soared as much as 42%, but were still at just 31-36 agorot on the shekel. Bonds of BCom, the intermediate company in the Bezeq pyramid, rose between 6.3% and 8.7%. Bezeq shares jumped 9.9% to 2.61 shekels while BCom stock climbed 15.3% to 7.28 and Internet Gold shares 13.4% to 1.89.
Zeevi gave no indication about why he was acting now to gain control of Bezeq, but investors were cheered by any offer that would help ease the group’s finances. Insolvent and weighed down by 730 million shekels in debt to bondholders, Internet Gold has been under pressure to find a buyer for its majority stake in BCom since mid-2018. BCom, whose sole asset is its 26.34% controlling stake in Bezeq, has an even bigger debt load of 2.5 billion shekels.
The Zeevi offer would put 300 million shekels of badly needed cash into Internet Gold, raising its cash holding to 430 million. The Zeevi plan calls for transferring 350 million of that to BCom, which in turn would allow BCom to tap the equity market for more capital. It needs that capital after its shareholders’ equity was cut by Bezeq’s fourth-quarter write-down.
Nevertheless, sources in the capital market said there are problems with the Zeevi offer — among others that it is an offer in principal whose terms could change during negotiations.
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