Scailex and Suny Electronics, owners of Israeli mobile operator Partner Communications, have warned Hong Kong-based conglomerate Hutchison Whampoa that it must adhere to an agreement to acquire an indirect 75% stake in Scailex, which owns 44.5% of…
Scailex and Suny Electronics, owners of Israeli mobile operator Partner Communications, have warned Hong Kong-based conglomerate Hutchison Whampoa that it must adhere to an agreement to acquire an indirect 75% stake in Scailex, which owns 44.5% of Partner.
Holding company Scailex announced on 21 August that Hutchison subsidiaries Persall and Kelburgh had called off the deal to buy 50% and 25% stakes respectively from Suny because of concerns over Partner’s financial performance in the second quarter.
Hutchison also expressed concern that Scailex and Suny bondholders would not approve what, for them, would be a loss-making deal.
The agreement would have seen Hutchison acquire an indirect 33.4% stake in Partner. As part of the transaction, Scailex was expected to sell its Samsung mobile handsets importing business to Suny for US$100m in order to reduce its debts.
However, Scailex claimed in a letter to the Israeli Securities Authority and Tel Aviv Stock Exchange that “every single one” of Hutchison’s stated reasons for cancelling the agreement are invalid and, as such, the agreement is still binding.
Scailex claimed Hutchison is responsible for any negative consequences it, Suny and their share and bondholders incur as a result of its cancellation notice.
“The company and Suny intend on instituting all measures necessary in order to defend themselves against the adverse repercussions and damages pertaining to the cancellation notice as stated, and they reserve all of the rights and remedies available to them against the buyers, including enforcement and/or pecuniary compensation,” Scailex said.
Scailex owes Hutchison US$300m as well as about US$460m to third parties, and the Hong Kong conglomerate had agreed to extend the repayment date of Scailex’ US$300m loan by three years to 2017.
Hutchison founded Partner in 1997 before selling its 51% stake in the company to Scailex for US$1.38bn in 2009. Partner, which operates under the Orange brand, is the second-largest mobile operator in Israel.
