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Borrow from Peter to pay Paul: Intl calls provider Barak seeks bank loans to pay off bonds

The company hopes to take advantage of the recent 2% cut in interest rates

International calls company Barak International Communications is negotiating with leading local banks in order to acquire loans with low interest, TheMarker has learned.

The company wants the loans in order to pay part of its bond debt.

The dollar bonds are estimated at $170 million, largely at 12.5% interest. The company's activity is financed by the principal and by previous loans from Bank Hapoalim and Discount Bank.

The principal of the bond debt has to be paid back in 2007. The payments on the bi-annual 6.5% interest are to begin in May 2003. The return on the notes is estimated at 25%.

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CEO Avi Patir a month ago told TheMarker that the company is considering a debt conversion. He said that right from the start it was clear that the company would convert the debt as soons as possible. The company wanted to make a public offering a year ago, but plans were shelved because of the Nasdaq crash.

Barak shareholders include Clalcom (44%), Matav Cable Systems (Nasdaq:MATV), which has 10%, Sprint (25%), Deutsche Telekom, (NYSE:DT), and France Telecom (NYSE:FTE), each with 10.5% in Barak.