Fate of Eurocom Bailout Appears to Be in Hands of Discount Bank

Other two creditors appear to favor Saidoff, who sweetened his cash bid by NIS 25 million

Amav Architects

The fate of indebted Eurocom Communications appeared to be in the hands of Israel Discount Bank Wednesday as Naty Saidoff, the lead contender to buy the company that controls Bezeq, said he would not agree to any delays in the decision-making process.

In marathon talks overnight Tuesday, Saidoff improved the cash portion of his offer by adding 25 million shekels ($7.3 million), for a total of 400 million shekels. In Tel Aviv District Court Judge Eitan Orenstein’s courtroom Wednesday, Saidoff’s lawyers said he wanted a quick decision on Eurocom’s fate.

Rejecting a request by Eurocom lawyers to hold off for 30 days on closing any deal, Amir Bartov, Saidoff’s attorney, said, “If there isn’t a creditors’ meeting to approve a deal by February 7, we’re dropping out.”

The bank creditors of Eurocom Communications, which are owed a combined 1.2 billion shekels, agreed that Saidoff’s and two other bids should be considered by bank management as soon as possible.

The other two bids are from Eduardo Elsztain’s IDB Group and from brothers Chen and Tzahi Neuman through their closely held Alon Group. The winner will get control of Bezeq, Israel’s biggest telecommunications company, which Eurocom controls through a string of intermediary companies.

Among the bank creditors, Bank Hapoalim and First International Bank of Israel reported support Saidoff, on the assumption that Elsztain’s bid will encounter antitrust problems because IDB Group controls Cellcom Israel, Israel’s biggest mobile carrier and a Bezeq competitor.

Meanwhile, they regard the Neumann bid as speculative and not a serious third option.

Bank Discount lawyer Amnon Lorch gave the court a confusing statement Wednesday on the bank’s position. It was understood to mean the bank didn’t support Saidoff. On the other hand, Saidoff’s representatives said they were under the impression that Discount did support the bid.

Discount Bank’s New York branch does considerable business with Saidoff, who controls a Los Angeles-based property empire, but it also has close ties with Elsztain’s IDB group. Sources close to Elsztain and Discount denied he was putting pressure on the bank to support his Eurocom bid.

Discount, whose 480 million shekels in loans to Eurocom Communications make it the company’s biggest creditor, had been trying for weeks to find other bidders, which yielded the Neuman bid. Sources said its options were to approve Saidoff, continue the search for alternatives or propose selling off Eurocom’s assets piecemeal.

Any delay, however, increases the risk that the creditors of Eurocom Real Estate, a sister company to Eurocom Communications, will act unilaterally if the Eurocom Communications bailout does not address the issue of the 250 million shekels owed to them.