Hutchison Closer to Control of Israeli Subsidiary

Israel's Partner Communications has said that Matav Cable, the holder indirectly of approximately 15.2% of Partner's issued and outstanding share capital, has entered into conditional agreements to sell to a subsidiary of Hutchison Whampoa approximately half of holdings in the company, about 7.7% in total.

The shares are held indirectly by Matav Cable through its Matav Investments and Matbit Telecommunication Systems subsidiaries. According to the announcement by Matav Cable, the gross gain to Matav Cable will be approximately US$62 million and may be adjusted to up to US$67.64 million pursuant to a certain agreed formula, six months after the completion of the Agreements. Upon completion of the sale, the shareholding of Hutchison in Partner will increase to approximately 42.7% and the shareholding of Matav Cable in Partner will decrease to approximately 7.5%.

Under its credit facility, Partner is required to repay Bank Hapoalim on an accelerated repayment schedule, as a result of Bank of Israel rules restricting loans to related entities. Certain controlling persons of Partner's principal shareholders are also, indirectly, part of the controlling group of shareholders of Bank Hapoalim, one of the banks participating in the credit facility. Upon fulfillment of the conditions precedent and completion of the sale of shares by Matav Cable to Hutchison as described above, Partner expects to cease to be considered a related entity to Bank Hapoalim for purposes of the Bank of Israel rules and, as a result, Partner expects that the Bank of Israel rules requiring Bank Hapoalim to receive accelerated repayment will no longer be applicable.'"

Posted to the site on 12th April 2002