Partners agree on plan to save Tevel - TheStreet

"A plan has been formulated, that all the parties accept, to rehabilitate Tevel," announced the tottering cable company's court-appointed special manager, Zvi Yochman, yesterday.

"But each of the parties is still trying to improve its position," Yochman added. Nothing has been signed yet, but he believes finalization is close. Meanwhile talks are continuing to merge Tevel with Israel's other two cable TV companies, Golden Channels and Matav Cable Systems (Nasdaq:MATV).

The arrangement Yochman proposes requires approval by at least 75% of Tevel's creditors. He proposes that the banks, to which Tevel owes the sum of NIS 2.425 billion, convert the debt into Tevel shares according to a company value of NIS 830.5 million at the end of three years (that valuation for the purposes of the debt only).

The same arrangement would apply to other creditors, to whom Tevel owes something over $10 million.

Moreover, Yochman suggests that creditors lacking securities forgive 60% of Tevel's debt to them, or alternatively forgive 80% of the debt and receive linked ten-year bonds worth 80% of the debt, bearing interest of 24%.

Under his plan, Tevel would transfer debt of NIS 1.8 billion to the merged cable TV company. The rest of its debt to the banks, NIS 600 million, would be rescheduled over ten years. At the end of three years, the banks would be entitled to convert the entire remaining debt to 25% of Tevel's equity.

Discount Investment Corporation will probably be the only shareholder that agrees to infuse more cash into the hungry company. It already agreed to provide another NIS 200 million, and to cover deficits as long as legal proceedings to liquidate Tevel are suspended. DIC further agreed to forgive NIS 140 million worth of Tevel debt to it, out of Tevel's total NIS 285 million debt to shareholders. It will also guarantee interest payment of Tevel's debt to the banks.

United Pan-European Communications (Nasdaq:UPCOY, ASE:UPC) is also expected to forgive debt to it, and to have its 46.5% stake in the Israeli company diluted to 16.94%.

Tevel's largest debt, NIS 958 million, is to Bank Leumi. It owes NIS 497 million to Bank Hapoalim, NIS 445 million to First International Bank of Israel and NIS 390 million to Israel Discount Bank. The cable firm also owes NIS 735 million to suppliers.

FIBI has reportedly agreed to the dilution of UPC's stake, although the move will also dilute guarantees the European company provided. FIBI holds 23.5% of UPC's share capital, which it received when lending it money.