Partner Telecom Moves to Distribute $130 Million Dividend After Buying Out Bondholders

Israeli telecommunications firm Partner Communications is pushing forward with its plan to distribute a special dividend of approximately NIS 500 million (around $130 million) to shareholders. The company, led by CEO Avi Gabbay, is taking steps to overcome opposition from bondholders who had previously blocked the distribution.

Partner announced an early redemption of its Series Z bonds for approximately NIS 344 million (around $88 million), a move scheduled for October 12. This follows a similar early redemption of Series H bonds, totaling NIS 140 million (around $36 million), which was completed earlier in November. These redemptions are intended to neutralize opposition from bondholders, clearing the path for the dividend payout, pending court approval.

The company plans to finance the dividend by raising NIS 750 million (around $190 million) in debt. The dividend distribution requires court approval, as bondholders are legally entitled to object. While bondholders in Series H voted against the distribution, a majority in Series Z did not meet the required two-thirds threshold, despite the bonds being close to their maturity date.

Gabbay had expressed confidence that Series Z bondholders would approve the dividend, stating their risk was "zero." However, after failing to secure the necessary majority in a subsequent meeting, Partner opted for the early redemption.

The controlling shareholder group, Amphissa, which holds 21.2% of Partner's shares and stands to be the largest beneficiary of the dividend, is expected to receive about NIS 106 million (around $27 million). Amphissa, comprising entities associated with Shlomo Rodev, Roni Gat, Mori Arkin, and the Phoenix insurance company, along with CEO Gabbay, acquired its controlling stake in April 2022 for approximately NIS 960 million (around $245 million).

Partner resumed dividend payments last year after a decade-long hiatus, distributing NIS 250 million (around $64 million). Earlier this year, an additional NIS 465 million (around $119 million) was paid out from the previous year's results. Following these distributions and an increase in valuation, Amphissa currently holds an unrealized profit of about NIS 730 million (around $187 million) on its investment.