Spacecom, the Israeli company that operates a fleet of satellites under the Amos name, looks as if it is close to being sold by its creditors to Aaron Frenkel.
Negotiations between the two sides have grown intensive in recent days towards a deal under which the institutional investors who control a 54% stake in the company would sell Frenkel a 44% holding and retain the rest for future sale, hopefully on better terms.
Market sources said they believed Frenkel was offering 11 shekels ($3.18) a share for Spacecom, or 100 million shekels total. That is an improvement over his original offer of 9 shekels but that would value the company at no more than 230 million shekels, far below the company’s 261 million market capitalization on the Tel Aviv Stock Exchange.
Spacecom shares closed down nearly 2% on Tuesday at 12.50 shekels.
On Monday the company announced that its Amos 17 communications satellite, which was launched into space in August to serve the growing African market, had completed its in-orbit testing and reached its final position, causing its shares to briefly rally.
But that was a rare instance of good news from a company that has gone through a very difficult period over the last several years.
Shaul Elovitch, the telecoms tycoon, lost control of the company and the rest of his empire in the face of police probes that have ensnared Prime Minister Benjamin Netanyahu. Elovitch had pledged Spacecom shares as collateral for an 800 million shekel loan to his Eurocom Real Estate subsidiary that he was unable to repay.
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Meanwhile, Spacecom suffered major operation setbacks in recent years, including the loss of its Amos 6 satellite in 2016 when the SpaceX rocket that was to carry it into orbit exploded on the launch pad. The year before that it lost contact with its Amos 5 satellite just four years after it was put into orbit, forcing it to scramble for alternatives to serve customers.
Spacecom once traded at a stock market capitalization of 1.5 billion shekels, but its troubles have caused its share price to plunge 72% over the last five years. It carries a net debt of $350 million, mainly due to the cost of building Amos 3, 4 and 17. Against that it has equity of $118 million.
Still, it continues to provide satellite services with its Amos 3, 4 and 7 satellites serving customers in Europe, the Middle East, Africa and Asia. In the first half of 2019, it had revenues for $41 million and a loss of $5.5 million, turning around from a loss of $3.6 million the same time in 2018 on revenues of $39.6 million.
Eurocom Real Estate still owes creditors, which include Mizrahi Tefahot Bank, Clal Insurance and Psagot Investment House, some 130 million shekels.
Hagai Ullman, the attorney representing creditors, had hoped to sell the Spacecom shares at between 12 and 13 shekels each, or a 250 million – 260 million valuation for the entire company, which would enable creditors to be repaid in full.
Frenkel has refused to meet that price, thus the two sides are moving toward a compromise deal whereby creditors could hold on to a 10% stake in expectation of getting a better valuation for the stock later.
Frenkelis leading an investor group organized by investment bank Poalim IBI that includes hedge funds and institutional investors. They made a 9 shekel-a-share offer in July, which valued Spacecom at just 180 million shekels. That offer was rejected by the creditors who then put Spacecom up for sale again.