Ben-Dov: Hutchison Can't Quit Partner Agreement

In a letter to Hutchison, Ben-Dov's companies Suny and Scailex said Hutchison's claims, along with its bid to cancel the deal, were not valid.

Telecom entrepreneur Ilan Ben-Dov has demanded of the Hong Kong conglomerate Hutchison Whampoa that it go through with a deal it tried to abandon to buy back the Israeli mobile phone operator.

In a letter to Hutchison, Ben-Dov's companies Suny and Scailex said Hutchison's claims, along with its bid to cancel the deal, were not valid.

"The acquisition is still in effect and the buyers are required to fulfill all of their obligations," the companies said in the letter issued on Wednesday to the Tel Aviv Stock Exchange. The letter comes weeks after Hutchison pulled out of a deal to acquire 75% of Ben-Dov's holding company, Scailex, whose main business is its 44.5% stake in Partner, Israel's second-largest mobile operator.

Hutchison cited a substantial deterioration in Partner's second-quarter results, which saw net profit slide 40%, as well as concerns that bondholders of Scailex and its Suny unit would not agree to the deal because of the haircut it would entail.

Suny and Scailex warned that Hutchison would be responsible for any damages they and their shareholders and bondholders suffered from the cancellation notice.

The companies intend to "take all necessary measures to protect against negative consequences and damages related to the cancellation notice, and reserve the right to remedies available to them against the buyers, including enforcement and/or compensation," the letter said.

Scailex has debts of $760 million, including $300 million owed to Hutchison, much of it from buying Partner. Scailex was seeking to repurchase about half of its outstanding non-convertible bonds and the deal with Hutchison was conditional on the success of the bond buyback.

The $125 million buyback, announced in June, would have put Hutchison back in charge of the telecom company it founded in 1997 but sold to Scailex in 2009 for $1.38 billion.

The Hong Kong company had agreed to extend repayment of the $300 million loan it made to Scailex under the original deal by three years to April 2017, but now Scailex will have to repay the loan by 2014. If it cannot, Hutchison will get a 12% stake in Partner.

Ilan Ben-Dov
Haaretz