Partner Communications Cancels Dividend Payments to Conserve Cash
Published on: 20th Sep 2012
Note -- this news article is more than a year old.
By: Ian Mansfield
Israeli mobile network Partner Communications (which trades as Orange) has announced that it is cancelling its previously announced dividend payment to shareholders for this year.
In a statement, the company said that "further to the Board of Directors' previous resolutions regarding a buy-back plan of notes, an early repayment of bank loans and the reduction of unused credit facilities, the Board of Directors resolved on September 19, 2012 to cancel the existing dividend policy for 2012, and to assess dividend distributions (and their scope) from time to time, by reference to, inter alia, the Company's cash flow, profitability, debt level, debt coverage ratios and the business environment in general."
The company has been under financial pressure due to increased competition in the already saturated market, and confusion over its future ownership after Hutchison Whampoa walked away from a deal to buy back control of the company from its indebted owners, Scailex.
Scailex has debt of about $760 million, and owns 46% of the mobile network, with the rest traded on the Tel Aviv Stock Exchange.
The expectation that Scailex would demand higher dividend payments from Partner Communications lead Standard & Poor's Maalot to put the company's rating on CreditWatch on expected weakened liquidity and financial metrics due to the expectation for those higher dividends.
The CreditWatch may now need to be revised after the company cancelled the dividends.