Argentine businessman Eduardo Elsztain, who wrested control of IDB Development Corp. from fallen Israeli tycoon Nochi Dankner, has now reportedly set his eyes on Israel’s largest telecom provider, Bezeq.
IDB, which is controlled by Elsztain, has approached the two large banking creditors of Eurocom Communications Ltd. to get information about the sale process of Bezeq The Israeli Telecommunication Corp., the Calcalist financial daily reported on Monday. Eurocom, controlled by Israeli tycoon Shaul Elovitch, holds a controlling stake in Bezeq via units.
Three Israeli banks — Israel Discount Bank Ltd., Bank Hapoalim Ltd., and First International Bank of Israel Ltd. — filed a request in a Tel Aviv court last month to break up Eurocom, as it is insolvent, they said. The move is creating pressure on Elovitch to sell his controlling stake in Bezeq to pay off his debt to the banks.
Elsztain, who lives in Argentina, is expected to come to Israel in coming days to meet with bank officials, Calcalist reported, adding that it is not yet clear if Elovitch is part of this proposed transaction. If the banks approve a Bezeq sale with the Argentinian businessman, Elsztain is expected to go ahead with the deal via a unit of IDB, Discount Investment Corp., Calcalist said.
The biggest hurdle Elsztain faces is the fact that Discount Investment owns a 45.6 percent stake in cellular provider Cellcom Israel Ltd., which it will have to sell if the acquisition of Bezeq proceeds, due to conflict of interest, Calcalist said. Elsztain is willing to do this, Calcalist added, because Bezeq is a bigger company and has a wider range of services it provides customers. There are also other regulatory hurdles that need to be overcome before such a deal can happen, said Calcalist, and IDB officials are looking into how to overcome these hurdles.
The banking creditors of Eurocom are also in talks for the sale of Bezeq to Israeli born US diamond dealer Naty Saidoff, who is expected to submit a proposal to the court in coming days, Calcalist said. Saidoff is offering NIS 370 million ($87.2 million) in cash for Eurocom’s units and to repay NIS 323 million in debt over 10 years. The offer also proposes that Saidoff will pay the banks 80 percent of profits for a period of five years to pay off the NIS 1.4 billion Eurocom owes the banks.
“As a leading investment group we study investment opportunities from time to time,” an IDB spokesman said in a message to The Times of Israel. “When there will be information that needs to be reported regarding any investment, we will do so, as required.”