Partner Communications Seeks Approval for Special Dividend After Bondholder Rejection

Israeli telecommunications company Partner, led by CEO Avi Gabbai, is persisting in its attempt to distribute a substantial special dividend of 500 million shekels, despite initial rejection by its bondholders. The company previously failed to secure the necessary approval from holders of its Series H bonds, who voted against the proposal, and Series G bondholders, who did not achieve the required two-thirds majority.

Following the second quarter earnings report last week, Partner announced an early redemption of its Series H bonds, totaling 140 million shekels, scheduled in two weeks. The company is now convening another virtual meeting for Series G bondholders on September 7th. This meeting will focus on discussion and consultation regarding the dividend distribution request, with a subsequent vote anticipated. Partner plans to finance the dividend through a new debt issuance of 750 million shekels.

If approved, the dividend distribution, which does not meet the profit test, is expected to be sanctioned by the court. This move would increase Partner's debt-to-EBITDA ratio from 0.7 at the end of 2025 to 1.1 by the end of 2026. CEO Avi Gabbai stated that the risk to Series G bondholders, whose bonds mature in June 2027, is "zero," arguing there is no logical reason for them to vote against it.

The largest shareholder in Partner, the Amphissa Group, which includes entities controlled by Shlomo Rodev, Roni Gat, Muri Arkin, The Phoenix, and CEO Gabbai himself, stands to benefit significantly. Amphissa acquired controlling shares in April 2022 for approximately 960 million shekels and would receive about 106 million shekels from the proposed dividend. Partner resumed dividend payments last year after a decade, distributing 250 million shekels, followed by another 465 million shekels earlier this year. Amphissa currently holds an unrealized profit of around 800 million shekels on its investment.