Internet Gold’s rollover of debt, which it commenced before the Sukkot holiday, continued on Wednesday with the announcement that it is swapping its C series of bonds for a D series.
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Internet Gold’s balance sheets until two weeks ago had C bonds worth 240 million shekels ($68.5 million), to be redeemed in March 2018 and 2019, and 540 million shekels in the D bonds, redeemable between 2019 and 2022.
The market gave a vote of confidence in the company, which is a subsidiary of Bezeq Communications, in agreeing to the idea of the bond swap. The company, which wanted to swap 200 million shekels worth of bonds, convinced investors to a swap of 181 million shekels. They gave Internet Gold 100 million shekels in C bonds in exchange for 111 million shekels in D bonds, effectively swapping an annual return of 4.5% for an improved interest rate of 6%. Internet Gold only exchanged 74% of the bonds because some institutional investors preferred to keep short-term bonds.
The company now hopes that other bondholders will respond positively to the new offer after seeing that the current move has allowed the company to relax its payment dates, to be indifferent to Bezeq share price fluctuations as well as to the amount of dividends they will be able to attain. Likewise, investors can now fear less about the trials and tribulations of its embattled owner, Shaul Elovitch, who is being investigated by the securities authority and the financial problems of Elovitch and his company Eurocom.
A source close to the company said, “The company expects to erase almost all of the C series.”
Internet Gold has about 216 million shekels in its coffers, according to its second quarter report. The company released shares of B Communications, for which it can fetch 240 million shekels. The sums will allow it to meet all its interest and principle payments through January 2022.
Internet Gold’s share price surged 7.59% on Wednesday, while B Communications shares soared 7.29%. Bezeq was up a more modest 3.48%.