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Matav Cable Systems



) can expect to receive an infusion of about NIS 660 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, sources near the merger talks told TheMarker.

The problem is that the three cable TV companies Matav, Golden Channels and Tevel each bear different debt burdens. The banks are leaning toward agreeing on a mechanism that would equate their debt, with the merged company owing $1,070 per subscriber. Earlier talks had revolved around a figure of $940 per subscriber.

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Matav has the lowest debt of the three, by a wide margin. Golden Channels' debt per subscriber is more than $900. Tevel's debt per subscriber is the highest, at over $1,200. Matav's is $550.

The difference between the estimated debt of the merged company is around $520 per subscriber. Matav, with its 280,000 subscribers, would therefore receive a bank loan totaling NIS 660 million, raising its debt to equal that of its peers.

Industry sources say Matav insists on receiving the difference in cash, or it will torpedo the merger.

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 loan will serve as working capital for Matav's share in the merged cable venture.

If the deal is finalized, the merged cable TV company will have annual revenues of almost NIS 2 billion, according to monthly average subscriber revenues of NIS 140 per household, and a debt burden of about NIS 6 billion.