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UPDATE 1-Hutchison ends deal to regain control of Partner Comm
August 21, 2012 / 6:47 AM / 5 years ago

UPDATE 1-Hutchison ends deal to regain control of Partner Comm

(Adds details from Scailex, background)

TEL AVIV/HONG KONG, Aug 21 (Reuters) - Hong Kong conglomerate Hutchison Whampoa said on Tuesday it had ended a deal to regain control of Israel’s second largest mobile phone operator Partner Communications.

The conglomerate said on its website that one of its units and a subsidiary of the Li Ka Shing Foundation had ended a deal to acquire a 75 percent stake in Scailex from Suny Electronic Inc. Scailex owns 44.5 percent of Partner.

According to Scailex, Hutchison cited several reasons for cancelling the deal, including a substantial decline in Partner’s financial results in the second quarter.

“In addition, the buyers expressed concern that it would not be possible to complete the purchase of the company’s (Scailex) bonds according to the conditions of the partial purchase offer for the bonds given the adamant stance of the bondholders’ representatives against the offer,” Scailex said in a statement.

Scailex has debts of $760 million, including $300 million owed to Hutchison, much of it from buying Partner. Scailex was seeking to repurchase about 50 percent of its outstanding non-convertible bonds and the deal with Hutchison was conditional on the success of the bond buyback.

The sale for $125 million in cash, announced in June, would have put Hutchison back in charge of the telecoms company it founded in 1997 but sold to Israeli holding company Scailex in 2009 for $1.38 billion.

Since the sale, Israel’s mobile phone market has faced cut-throat competition partly from de-regulation that has put pressure on Partner’s earnings and share price.

The Israeli government has forced mobile operators to slash fees they charge each other to connect calls and to scrap exit fines for customers. It also issued new licences to create more competition and lower prices.

Hutchison sold its Partner stake for $17.50 a share three years ago. The Nasdaq-listed shares closed at $3.81 on Monday.

The Hong Kong company had also agreed to extend repayment of the $300 million loan it made to Scailex under the original deal by three years to April 2017.

Scailex said it could not at this time assess the impact of the deal's termination on its business, results and securities. For a statement clicks here (Reporting by Tova Cohen and Donny Kwok; editing by John Mair and Jason Neely)

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