Discount Investment Corporation (TASE: DISI ) and Tevel'stroubles just keep coming. Jerusalem entrepreneur Ever Zussman, one of the company's founders and owner of a 5% stake, doesn't plan to sit quietly by as the big shareholders, Discount and United Pan-European Communications (Nasdaq:UPCOY, ASE:UPC), cook up a deal with the banks that leaves him out.

Zussman brought UCTV into Tevel as a partner in its early days, until UCTV was sold to UPC in 1990 and the latter became a Tevel shareholder. Zussman introduced UPC and Discount, but now feels, and not for the first time, that he is being "left out".

The last time Zussman felt "left out" he took the extreme step of filing a law suit against his bigger partners, Tevel directors and CEO Joseph Douer. They threatened that his action could damage the company, but Zussman was not intimidated and pressed the suit.

Since then, Tevel's business has taken a sour turn, not due to the law suit, but to terrible management and the "it will be OK" attitude that pervaded the halls of power at the cable television companies.

Baseless consulting fees

In June 1999, Zussman sued the IDB group, Discount Investments, and UPC's then-chair Mark Schneider, claiming the two big shareholders had collected NIS 100 million in consulting fees that were entirely unjustified. Zussman claimed this amounted to a covert dividend and that he, the minority shareholder, had been excluded.

Zussman, not a partner to Tevel's decision-making, didn't know about Discount Investments and UPC's decision to collect consulting fees until after the fact. Zussman claimed that even if consulting services had been provided, the scope was cause for question, therefore accusing his parterns of distributing a hidden dividend against Tevel¿s better interests.

Zussman demanded that the consulting agreements be voided and that the court order the two to return the "fees" to the company, or to give him his relative portion of the "dividend".

A source close to Zussman says his law suit is pending and he plans to push the matter forward. The comment is surprisingly similar to Zussman's response on the day the lawsuit was filed, when he told Ha'aretz he hoped to succeed through the law suit in sending a clear message to the bigger shareholders.

We hear you

Then, in 2000, Discount and UPC understood they had to buy Zussman out of the company. However, then, as now, Zussman wasn¿t selling despite not being a partner to Tevel¿s management and despite the fact that his stake will be diluted by the cable company merger, if it takes place.

Zussman, apparently, believed in the cable television industry and wanted to enjoy the spoils, fruits of his work in establishing the company and the partnership between Discount and UPC. Otherwise, his refusal to sell his stake at the per subscriber prices acceptable in 1999 and 2000. Zussman demands that the IDB group provide him, and Tevel, with all documentation of business opportunities in the cable and telecommunications sectors that he claims IDB has exploited since 1993 not in the framework of Tevel. Zussman believes that had he exercised his right of first refusal in 1998, he would have made a lot of money.

Today Zussman is sorry he didn¿t use that right, and therefore, this time, he plans to be involved in the details of arrangements and use his position in situations where the agreement of all the shareholders is required.

It became clear this week that these arrangements are far from trivial, and include, a change in the structure of the company and allocation of shares to the banks. The idea to allot shares to the banks arose recently as a possible solution to the cable company¿s credit crunch, as it is managed in trusteeship with a stay of liquidation hanging over its head.

The banks are divided, but it looks like the solution will involve forgiving some debt and converting other debt to capital by allocating shares to the banks.

In order not to create obstacles that would interfere with the merger and the agreement with banks, Zussman wants consideration, which Discount and UPC understand quite well. But this time, the consideration cannot come in the form of a generous purchase offer for his stake, but will probably come in the form of accepting his demands in the arbitration proceeding related to his law suit.

Small shareholders stand up to be counted

In Tevel's crisis situation, weak shareholders can stand proud and feel at least equal to the bigger partners. In this way, UPC, on the verge of bankruptcy itself, managed to dictate to Discount Investments that UPC will not be diluted not injecting cash into Tevel and dragging Discount into a stay of liquidation proceeding.

And in this way Zussman understood UPC's methodology and the status of a shareholder against his partners. He has "nothing to lose" from Tevel's possible receivership, so his strength was renewed.

If the compromise in Zussman's law suit against IDB is delayed, Zussman could "sabotage" Discount Investments's efforts to reach an agreement that would drag Tevel, and the entire cable sector, onto a new path. In the meantime, Discount Investments carefully states in its financials that it has not intention of making any provision for Zussman¿s suit.