The battle for control of Bezeq, Israel’s largest telecommunications company, is boiling down to a struggle between three investors, one from Brazil, one from Argentina and one from the United States.
TheMarker has learned that the main financier behind the group led by the brothers Tzahi and Chen Neuman is the Brazilian billionaire Elie Horn, 73, a Jew of Syrian descent who lives in Sao Paulo, Brazil.
The group is expected to submit a binding offer soon for Eurocom, the holding company that controls Bezeq through a string of intermediaries. The move comes after Tel Aviv District Court Judge Eitan Orenstein put off a ruling on the fate of a Eurocom bailout until as late as April 22.
Horn, who is on Forbes’ World’s Billionaires list, has an estimated worth of more than $2 billion. He is chairman and controlling shareholder of the Brazilian real estate giant Cyrela Brazil Realty. Cyrela, which is traded on the Brazilian stock market at a $2 billion market cap, has 15,000 employees and has developed 70,000 housing units over the past three years. In addition it develops shopping and business centers. Horn himself contributes very heavily to charity, including to Israel.
His business interests in Israel include NBC Real Estate, which is involved in urban renewal projects and whose partners include the British property investor LeoNoe, who in the past owned the property investor British Israel Investments, and Ron Hadassi, currently chairman of Elbit Imaging and formerly chief business administrator in Israel for major investor Matthew Bronfman.
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Another investor from Europe may join forces with Horn and the Neuman brothers’ group, although not to the extent of Horn’s investment.
The Neuman brothers control closely held company Alon, which has interests in real estate, hotels and high-tech vehicles. The Alon group has over the years looked into purchasing control in the IDB group, Jerusalem Economy Corporation, the Sonol and Ten gas station chains, and Ispro.
The Neuman group was brought into the Eurocom bidding process by Discount Capital, Israel Discount Bank’s investment arm, at a fairly late stage. Before the deadline for submitting its bid, the group held meetings with senior executives at Bank Discount and Bank Hapoalim, both of which are Eurcom creditors
The Neuman group is offering 520 million shekels ($150.6 million) in cash to the creditors of Eurcom Communications, which controls Bezeq, as well to repay 250 million in debt owned by Eurocom Communications’ sister company, Eurocom Real Estate.
The group is also offering to reschedule debt of 290 million shekels over seven years to pay back more debt, contingent on the rising value of Eurocom’s assets, including an option to inject another 80 million shekels. The total value of the bid comes to 1.14 billion shekels.
However, the Neumann group will almost certainly have to improve the offer to win serious consideration by Eurocom creditors,. Moreover, it is unclear that Neuman brothers can finance a deal on this scale, with or without international partners.
Eduardo Elsztain, the Argentine property magnate who controls the IDB Group, has shown no signs he will back down from the fight for control of Eurocom. Elsztain’s bid, made through IDB’s Discount Investment Corporation unit, is for 1.08 billion shekels. However, Elsztain has run into difficulties with the Antitrust Authority because Discount controls Cellcom israel, the country’s biggest mobile phone company and a Bezeq competitor.
After the Antitrust Authority stated its objections in a letter last week, IDB requested clarifications that would satisfy Eurocom’s creditors and allow IDB to submit a binding offer for Eurocom.
IDB is aware that the timetable for the sale of Cellcom will have to be shorter than the six months it had hoped for. But they want the Antitrust Authority to let it remain in the bidding process and will reportedly pledge to sell its Cellcom holding by the time the debt agreement is completed, or even beforehand. The Antitrust Authority is expected to discuss IDB’s proposal this week.
Meanwhile, Los Angeles-based Naty Saidoff will try this week to move ahead with the banks to bring his proposal to a vote by the creditors. Saidoff, who spent more than a year fighting for control of Africa Israel Investments before losing out to Moti Ben-Moshe, does not want another lengthy repeat performance with Eurocom.
Saidoff’s representatives are demanding that a bailout accord for Eurocom be completed in the coming weeks.
However, Orenstein has lifted – at least until April – the threat of Eurocom Real Estate’s creditors, chief among them Mizrahi Tefahot Bank, taking control of the properties on which they have a lien, namely Eurocom’s 55% stake in satellite operator Spacecom and its 37.5% stake in the Midtown real estate project in Tel Aviv.
The threat of the Eurocom Real Estate’s creditors acting unilaterally was a sword Saidoff held over Eurocom Communications’ creditors, and now it has diminished. The additional time Orenstein has given will allow Eurocom to advance its plans to recycle a debt of 270 million shekels via a bond issue and thus repay its debt to the Eurocom real estate creditors.
Eurocom Real Estate executives are now in discussions with the Israel Securities Authority about the bond issue’s structure and prospectus.
Although Saidoff has improved his bid a few times already to cinch the deal, he will have to improve it further. Otherwise, the fight for Eurocom and Bezeq will reopen, joined by other investors now weighing a move. .