Partner Communications Co. (PTNR), Israel’s second-largest mobile phone company, declined today on concern a stake sale to Saban Capital Group Inc. may be in doubt after Scailex Corp. (SCIX) said it may use shares as collateral.
Partner’s shares dropped as much as 3.5 percent and were trading 2.3 percent lower to 22.28 shekels at the 1:37 p.m. in Tel Aviv, headed for the lowest level since Nov. 6. Volume was about one-third of the three-month daily average. Scailex, which holds 45 percent of Partner, according to data compiled by Bloomberg, was unchanged. The TA-25 benchmark index advanced 0.7 percent on speculation efforts to end a conflict between Israel and the Islamist Hamas movement, which controls the Gaza Strip, will succeed.
Scailex said today in a filing to the Tel-Aviv Stock Exchange it is considering a private debt offering to institutional investors of as much as 500 million shekels ($127 million) and would use shares of Partner and/or of Tapuz People Ltd. (TPUZ) as a collateral. In October Scailex said it is in talks with parties, including with Saban Capital Group Inc. to sell a stake in Partner. Moshe Debby, a spokesman for Saban in Israel, declined to comment by phone.
“The market is concerned that if the bond issuance takes place with Partner’s shares as a collateral, it could torpedo a potential sale of control in Partner to Saban,” Zach Herzog, head of international sales at Psagot Investment House Ltd. in Tel Aviv, said today by phone.
Partner shares have been the second-worst performing on the TA-25 (TA-25) index this year, after Cellcom Israel Ltd. (CEL:US), the country’s largest mobile-phone provider, as competition in the wireless industry intensified. Hot Telecommunication System Ltd. (HOT) and Golan Telecom Ltd. entered the wireless market in May, leading to greater price competition.
Partner is scheduled to report third-quarter results on Nov. 21. The mean estimate of three analysts is for sales of 1.43 billion shekels versus 1.8 billion shekels in the comparable period, according to data compiled by Bloomberg.
Scailex talks with Saban come after an agreement with a group including Hutchison Whampoa Ltd. (13) to buy the company failed in August. Scailex said Hutchison cited a decline in operations of Partner as a reason for pulling out of the acquisition deal.
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