"The banks are in disagreement, but it looks like the solution to the capital crunch at Tevel will be debt forgiveness through its conversion to capital, probably by issuing shares to the banks, postponing debt or writing it off altogether" a senior source in the talks said today. Apparently, Bank Hapoalim and Bank Leumi are harsher un their stances and are threatening receivership.
Other industry sources reinforce the estimate that the banks will have no choice but to forgive some of Tevel's debt. The big fear among the banks is of opening a Pandora¿s box, and other communications companies could exploit the precedent to demand forgiveness for their own debts.
Another senior source recently told TheMarker that if the banks are convinced the merger will take place then Tevel must be rescued, which will require the shareholders to get behind the company and inject capital. Debt write-offs are dependent on the owners willingness to undertake the task.
A number of recent omens in Tevel's favor cannot be ignore: the company is about to receive it broadcast license, the cable merger was approaved byt eh antitrust commissioner, and talks are being conducted on the scope of debts for original productions.
Representatives of United Pan-European Communications (Nasdaq:UPCOY, ASE:UPC) met with Tevel trustee Zvi Yochman last night, but no significant progress was made and the meeting was primarily devoted to studying the situation. The UPC talks are preliminary, and no significant progress is expected before Yochman presents a business plan for operating Tevel.
Monday Yochman is to submit his response to the court when, according to market sources, first impressions and intentions will become evident. In any case, the sources estimate, a solution to the crisis is a matter of weeks, not days.