Partner Communications Company Ltd. ("Partner" or "the
Company")(Nasdaq:PTNR)(TASE:PTNR), a leading Israeli mobile
communications operator, announces the following recent
developments during the third and fourth quarters of 2009 and
reports the following additional information:
Site Licensing Following
the previously reported recommendations of the inter-ministry
committee regarding the appropriateness of future application of
the exemption from obtaining building permits for radio access
devices, currently relied upon by cellular operators, the Attorney
General instructed the Ministry of Interior (in consultation with
the Ministry of Communications) to prepare regulations setting
conditions that would limit the exemption to extraordinary
circumstances.
Regulation The Ministry of
Communications has recently commenced examination of the
interconnect tariffs in Israel following an August 2008 government
resolution regarding this matter.In addition, subsequent to the
hearings being conducted by the Ministry of Communications
regarding a draft mobile virtual network operator ("MVNO") license
and regulations, and following a hearing conducted by the Ministry
of Communications in November 2009 regarding the prohibition of the
existing cellular operators from operating as MVNO operators, the
Ministry of Communications conveyed the regulations to the Ministry
of Justice for approval.
A tender committee that was appointed by the Minister of
Communications to allocate UMTS frequency for an additional
cellular operator recently published general principles for the
tender, which are not yet final. According to the principles
published, the tender will include additional UMTS spectrum for two
additional operators; participation will be allowed for new
operators and MIRS Communications Ltd, (other existing cellular
operators will not be allowed to participate) and the winner shall
be awarded various benefits and leniencies such as rebates on
spectrum and license fees and exemptions from royalty payments. In
addition, the winner will be allowed gradual geographic deployment
of the infrastructure over a number of years.The tender committee
will examine the possibility of allowing the winner to pay
interconnect tariffs in accordance with the lowest rate that will
be set forth in the regulations, from the beginning of its
operation as a cellular operator. Lastly, the Minister of
Communications will consider allowing the winner to provide mobile
radio telephone services by using telecommunication infrastructure
of existing domestic cellular operators (for example through site
sharing and national roaming).
FinancingFollowing the
Company's press release, dated December 28, 2009, regarding the
engagement of the Company with leading banks in Israel, the Company
hereby notifies that during the months of September through
December 2009, it had signed four credit agreements with three
Israeli leading banks, which are among the five leading banks in
Israel, and which shall be referred hereto as "Bank A",
"Bank B" and "Bank C".
A. Credit agreements with Bank A and Bank B
(a) The Company had signed two separate credit framework
agreements with Bank A and an additional credit framework agreement
with Bank B. A framework agreement dated October 1, 2009 had been
signed with Bank A for the receipt by the Company of a credit
framework in a principal sum of NIS 250 Million (hereinafter the
"October Agreement"). A framework agreement dated November
24, 2009 had been signed with Bank B for the receipt by the Company
of a credit framework in a principal sum of NIS 700 Million
(hereinafter the "November Agreement"). A framework
agreement dated December 2, 2009 had been signed with Bank A for
the receipt by the Company of a credit framework in a principal sum
of NIS 250 Million ("December Agreement" and collectively
with the October Agreement and the November Agreement, the
"Framework Agreements"). The main terms and conditions
contained in such credit Framework Agreements are identical, except
for specific changes which will be detailed below.
(b) The nature of the
loans - the Framework Agreements provide the Company
with an option to draw down two kinds of loans - short terms loans
(a maximum duration of one year) and On Call loans. The minimal
draw-down amount available under the October Agreement and the
December Agreement is NIS 100,000. The minimal draw-down amount
under the December Agreement is NIS 100,000 for short term loans
and NIS 600,000 for On Call loans. The credit framework of the
October Agreement is for a term of five years effective as of
October 1, 2009 and until September 30, 2014. The credit framework
of the November Agreement is for a term of three years effective as
of January 1, 2010 and. until December 31, 2012. The credit
framework of the December Agreement is effective as of January 1,
2010 until December 31, 2012.
(c) Interest
- the interest rate chargeable under the October Agreement and the
December Agreement is the interest rate generally used by Bank A
for its customers for similar types of loans in NIS and for similar
durations (before margin) as apply under the October Agreement and
the December Agreement, plus an annual interest of 0.85%. The
current interest rate applicable under the October Agreement and
the December Agreement is therefore 2.2%. The interest rate
chargeable under the November Agreement is the interest rate
generally used by Bank B for its customers for similar types of
loans in NIS and for similar durations (before margin), as apply
under the November Agreement, plus an annual interest of 0.85%. The
current interest rate applicable under the November Agreement is
therefore 2.25%.
(d) Commitment
Fee - the Company is obliged to pay a commitment fee at
a rate of 0.4% per annum regarding the average of the undrawn
portion of the credits. The commitment fee shall be payable on a
quarterly basis.
(e) Collaterals - the loans are not
secured by any kind of collaterals.
(f) Covenants - the main covenants set
under the Framework Agreements are as follows:
(1) The Company is required to comply with the following
financial ratios: (i) Total Debt1 to EBTIDA2 less Capital
Expenditure shall not exceed 6.53; and (ii) Total Debt to EBTIDA
shall not exceed 44.
(2) A negative pledge covenant which restricts the Company from
creating any kind of security interest, except for the following:
(i) any security interest arising by law; (ii) security interests
over goods and documents of title to goods arising in the ordinary
course of business, and in respect of letter of credit transactions
entered into in the ordinary course of trade; (iii) any security
interest on any asset or rights that existed at the time of
acquisition provided that the acquisition was in the ordinary
course of business on arms length terms, where such security
interest was not created in contemplation of or in connection with
the acquisition; (iv) any security interest arising from operating
or financial lease agreements ; (v) any security interest arising
from the netting of bank account balances; (vi) any security
interest arising by way of any retention of title of goods supplied
where such retention is done in the ordinary course of its
business; (vii) any specific security interest created pursuant to
section 169(d) of the Israeli Companies Ordinance, for the benefit
of the entity who provided the funding for the purchase of such
asset; (viii) any other security interests in favor of third
parties (that are not floating security interests) securing an
aggregate obligation in a sum not higher than NIS 100,000 (in
addition to the security interests detailed in sections (i) to
(vii) above).
(3) Restriction to enter into a merger transaction, as a result
thereof the Company will not be the surviving entity.
(g) Decrease of Credit
Framework - The Company may choose to decrease the
credit frameworks set under the Framework Agreements, subject to a
fee payment.
(h) Events of
Default - The Framework Agreements contain customary events of
default which allow the lenders to accelerate the loans and demand
immediate repayment, such as in respect of a breach of obligations
or inaccurate representations under the Framework Agreements,
receivership, Company liquidation, appointment of a liquidator or
other winding up events of the Company, legal proceedings and
attachments for material amounts, ceasing of operations by the
Company for certain periods, cross default events in material
amounts and any affect on the Company's license, etc.
B. Credit agreements with Bank C dated December 27,
2009
(a) Nature of the
Loan - NIS dominated Bullet5 loan, not linked to the
CPI, in a principle amount of NIS 300 Million. The principle amount
of the loan had been drawn by the Company on December 28, 2009 and
is due on December 27, 2013.
(b) Interest - an
annual interest at the Prime rate minus 0.35%. Interest payments
are due at the end of every 3 months following the draw-down date
of the loan.
(c) Collaterals - the loan is not secured by any kind of
collaterals.
(d) Main Covenants - (i) submission of financial reports;
(ii) restrictions to provide loans and guarantees, not in the
ordinary course of the Company's business and in fair market value;
(iii) restriction to enter into a merger transaction, as a result
thereof the Company will not be the surviving entity; and
restrictions to perform any split or credit arrangement6; (iv)
Financial ratios as follows (X) Total Debt7 to EBTIDA8 less Capital
Expenditure shall not exceed 6.59; and (Y) Total Debt to EBTIDA
shall not exceed 410; (Z) Principal amount not to exceed 20% of the
total obligations of the Company towards the banks; (iv) A negative
pledge covenant which restricts the Company from creating any kind
of security interest with exemptions similar to the exemptions set
under the October Agreement, the November Agreement and the
December Agreement with Bank A and Bank B, as applicable.
(e) Early Repayment - The Company may make early
repayments of the loan, subject to an early repayment penalty,
except for certain circumstances, as set under the loan
agreement.
(f) Event of Defaults - The agreement contain customary
events of default which allow the lenders to accelerate the loans
and demand immediate repayment similar to the events of default
under the October Agreement, the November Agreement and the
December Agreement with Bank A and Bank B, as
applicable.
C. Additional loans – the Company's Board of Directors
has approved taking additional short term loans in an aggregated
sum of NIS 200 Million, without a framework agreement.
Forward-Looking
Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the US Securities Act of 1933, as
amended, Section 21E of the US Securities Exchange Act of 1934, as
amended, and the safe harbor provisions of the US Private
Securities Litigation Reform Act of 1995. Words such as "believe",
"anticipate", "expect", "intend", "seek", "will", "plan", "could",
"may", "project", "goal", "target" and similar expressions often
identify forward-looking statements but are not the only way we
identify these statements. All statements other than statements of
historical fact included in this press release regarding our future
performance, plans to increase revenues or margins or preserve or
expand market share in existing or new markets, reduce expenses and
any statements regarding other future events or our future
prospects, are forward-looking statements.
We have based these forward-looking statements on our current
knowledge and our present beliefs and expectations regarding
possible future events. These forward-looking statements are
subject to risks, uncertainties and assumptions about Partner,
consumer habits and preferences in cellular telephone usage, trends
in the Israeli telecommunications industry in general, the impact
of current global economic conditions and possible regulatory and
legal developments. For a description of some of the risks we face,
see "Item 3D. Key Information - Risk Factors", "Item 4. -
Information on the Company", "Item 5. - Operating and Financial
Review and Prospects", "Item 8A. - Consolidated Financial
Statements and Other Financial Information - Legal and
Administrative Proceedings" and "Item 11. Quantitative and
Qualitative Disclosures about Market Risk" in the form 20-F filed
with the SEC on April 27, 2009. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed
in this press release might not occur, and actual results may
differ materially from the results anticipated. We undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
About Partner
Communications
Partner Communications Company Ltd. ("Partner") is a leading
Israeli provider of telecommunications services (cellular,
fixed-line telephony and internet services) under the orange™
brand. The Company provides mobile communications services to over
3 million subscribers in Israel (as of September 30, 2009).
Partner’s ADSs are quoted on the NASDAQ Global Select Market™ and
its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and
TASE: PTNR).
Partner is an approximately 45%-owned subsidiary of Scailex
Corporation Ltd. ("Scailex"). Scailex's shares are traded on the
Tel Aviv Stock Exchange under the symbol SCIX and are quoted on
"Pink Quote" under the symbol SCIXF.PK. Scailex currently operates
in three major domains of activity: 1) the sole import,
distribution and maintenance of Samsung mobile handset and
accessories products primarily to the three major cellular
operators in Israel; 2) distribution and sale of various
manufacturers' mobile handsets, accessories and provision of
maintenance services, through a chain of retail stores and booths
("Dynamic"), to end customers of Cellcom (as part of the
acquisition of the controlling stake in Partner, Scailex announced
to Cellcom the termination of the distribution agreement through
Dynamic, effective July 1, 2010) and; (3) management of its
financial assets.
For more information about Scailex, see
http://www.scailex.com.
For more information about Partner, see
http://www.orange.co.il/investor_site.
1 Total Debt is defined as the aggregate of the amounts from
time to time of any indebtedness appearing in the financial
statements in respect of: (a) monies borrowed or debit balances at
banks and other financial institutions; (b) any debenture, bond,
note, long stock or other security, including, and without
derogating from the above mentioned, any bank guarantee, issued to
any third party, per request of the Company; (c) receivables sold
or discounted (otherwise than on a non-recourse basis) to the
extent only that any claim has been made against the Company with
respect to such receivables; (d) the acquisition costs of any
assets to the extent payable more than 365 days after the time of
acquisition or possession by the party liable where the deferred
payment is arranged primarily as a method of raising finance or
financing the acquisition of that asset; and (e) any amount raised
under any transaction other than those listed in paragraphs (a)-(d)
above, having the commercial effect of a borrowing or raising of
money. Provided that in computing the abovementioned amounts: any
item following within paragraph (e) shall be included only to the
extent the same is required by GP to be quantified in the financial
statements. Any securitization transaction by the Company
recognized as a "True Sale" in its financial statements, shall not
constitute a part of the total debt
2 EBITDA is defined as follows: in respect of any ratio periods,
the sum of the following, all as appearing in the Company's
financial statements, applicable for such ratio periods: (a) the
net income of the Company before extraordinary items; (b) the
amount of taxes set against the net profits of the Company in the
financial statements and (without double counting) any provision by
the Company for taxes; (c) any amortization and depreciation
reflected in such financial statements; and (d) any Net Financial
Expenses. For the purpose of the foregoing: "Net Financial
Expenses" means, for any ratio period, financial expenses, net for
such ratio period, as appearing in the financial statements
3 This ratio was 1.3 as of September 30, 2009
4 This ratio was 0.86 as of September 30, 2009
5 A bullet loan is a loan where a payment of the entire
principle of the loan is due at the end of the loan term, while the
interest payments are paid at defined installments during the term
of the loan.
6 A "Merger" as defined in part 8 or 9 of the Companies Law
5759-1999, or any other actions the result thereof is a purchase of
Company's assets; "Split" as defined in Part 5(B) of the Income Tax
Ordinance (New Version), or in any other law or similar act;
"Credit Arrangement" as defined in Section 350-351 of the Companies
Law 5759-1999, or in any other law or similar act.
7 See the definition of Total Debt is footnote 1
8 See the definition of EBITDA in footnote 2
9 This ratio was 0.86% as of September 30, 2009
10 This ratio was 1.3% as of September 30, 2009
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