Matav Cable Systems (Nasdaq:MATV) can expect to receive an infusion of about $92 million from the banks in order to equate its debt with that of Israel's other two cable companies, ahead of their merger into a single cable giant.
Matav has the lowest debt of the three, by a wide margin. Golden Channels' debt per subscriber is around $900. Tevel's debt per subscriber is the highest, at about $1,200. Matav's is $620. The estimated debt of the merged cable company is around $940 per subscriber.
Technically speaking, the companies are not merging to create a single entity. Each is controlled by a holding company, and the three holding companies are creating a joint subsidiary called Gvanim.
The mechanism to equate the debt will be for the banks to lend Matav another $92 million, around $320 for each of its 287,000 subscribers, a cable industry source told TheMarker. Thus Matav's debt will reach the height of the other companies.
The loan will serve as working capital for Matav's share in the merged cable venture.
Until now the banks were discussing giving Matav bonds as compensation for its higher debt burden, but that option seems to have fallen through.
The banks are the force driving the arrangement, as they are the companies' chief creditor.