Merged cable company likely to undertake debt per subscriber at Tevel rate - TheStreet

Under the terms of an imminent settlement between the cable companies shareholders, the overall debt of the merged company will be determined by Tevel's debt per subscriber rate.

The banks and shareholders have essentially agreed on a $940 debt per subscriber. Estimates place Golden Channels's debt at $900 per subscriber and Matav Cable Systems Media (Nasdaq: MATV) at $500.

Tevel would therefore be injecting about 75% of its bank debt into the merged company, while Golden Channels and Matav would increase their credit lines in order to match Tevel's debt.

Another possible option, in the event the banks do not approve additional credit for Matav and Golden Lines at the time of the merger, involves the merged company owing the difference in the debt burdens back to Matav and Golden Lines.

Originally, the determining the merged company's debt per subscriber rate according to the lowest of the three companies, had been discussed. However, IDB opposed taking on itself the additional $600 per subscriber.

Also, the banks may still forgive some of the cable sector's debt. A senior banking sector source recently said that the apparent solution to Tevel's crisis would involve both forgiving some debt and converting some of the debt to capital by allocating shares to the banks. The source argued that if the banks were convinced there would be a merger, then the forgiveness would be dependent on Tevel shareholders' willingness to participate in financing efforts.