Bezeq owner reportedly offers to sell stakes to pay off debt

Shaul Elovitch, the controlling shareholder of Bezeq, is in talks with banks to reach a debt settlement that envisages him selling off stakes of Israel’s largest telecommunication company over a number of years to repay his debt, Hebrew press reported Sunday.

Elovitch, who is embroiled in major fraud probe by the Israel Securities Authority (ISA) into his activities with Bezeq and related companies and his relationship with the director general of the Communications Ministry, owes nearly NIS 1 billion ($281 million) to the banks, including Israel Discount Bank Ltd. and Bank Hapoalim Ltd., Globes financial newspaper reported on Sunday.

As part of the proposal, Elovitch is suggesting that he sell some NIS 600 million in assets in the coming year and at a later date some 15 percent of Bezeq shares in batches of 5 percent a year. Another alternative would be to seek a partner for the firm, the Calcalist financial website said, citing banking sources.

Elovitch, a communications mogul who was also the chairman of Bezeq until the start of the ISA investigation, holds a controlling stake in Bezeq via a pyramidal company structure: his firm Eurocom Communications Ltd. controls Internet Gold-Golden Lines Ltd., which in turns controls B Communications Ltd. B Communications holds a 26% stake in Bezeq, and the rest of Bezeq, 74%, is held by the public via shares traded on the Tel Aviv Stock Exchange.

At a meeting with bank chiefs later Sunday, Eurocom representatives will present the debt settlement, which will also include sale of stakes in Internet Gold-Golden Lines, Globes said. The report added that the investigation has weighed on Elovitch’s financial situation, due to the drop in Bezeq’s share price since it started and also to increased competitive pressure.

Elovitch owes Israel Discount Bank some NIS 500 million and Bank Hapoalim some NIS 400 million, Globes said.

A spokeswoman for Eurocom and Elovitch had no immediate comment on the press reports.