Partner Communications Approved to Distribute NIS 500 Million Dividend

The Israeli telecommunications company Partner Communications, led by CEO Avi Gabbay, has received court approval to distribute a special dividend of NIS 500 million. The Central District Court in Lod granted the approval, allowing the company to proceed with the distribution within four months. This decision follows months of opposition from bondholders, which Partner resolved by repaying two series of bonds totaling approximately NIS 484 million. The dividend is unusual as it is not funded from retained earnings; at the time of the initial request in July, retained earnings available for distribution were only about NIS 75 million. Israeli company law permits such distributions with court approval, provided the company can still meet its existing and future obligations. Partner presented an economic opinion from Professor Zvi Wiener, asserting the distribution would not impair its solvency. The Tax Authority did not oppose the dividend, and the Israel Securities Authority took no position.

Partner's financial situation presented a challenge, as its cash reserves stood at approximately NIS 215 million at the end of June, insufficient to cover the planned dividend. To fund the distribution, Partner is exploring a new bond issuance, Series T, with a potential value of up to NIS 750 million. S&P Maalot reaffirmed Partner's credit rating at ilAA- with a stable outlook, assigning the same rating to the planned issuance. The funds raised are intended for the dividend, debt repayment, and general corporate needs. The company's balance sheet will reflect a shift towards increased leverage to facilitate cash distribution to shareholders, a change from its recent strategy of debt reduction. The Amphissa Group, Partner's largest shareholder with a 21.2% stake, is expected to receive about NIS 106 million from this dividend.

This planned distribution, if completed, would bring the total dividends distributed by Partner in 2026 to NIS 965 million, nearly NIS 1 billion within a year. This follows a previous dividend of NIS 465 million paid in March. Despite the financial maneuver, Partner's business operations show improvement, with net profit rising 17% in the second quarter to NIS 84 million and adjusted EBITDA reaching NIS 314 million. The company believes its financial stability can support increased debt for the dividend, though funding a dividend through debt issuance does not inherently increase the company's economic value.