Israel's Bezeq board gives DBS OK to issue NIS 450 million of debt

By Toni Weeks

San Diego, May 9 - Bezeq the Israel Telecommunication Corp., Ltd.'s subsidiary DBS Satellite Services (1998) Ltd. plans to issue up to NIS 450 million of debt, according to an announcement by parent company B Communications Ltd.

Bezeq's board of directors gave approval on Wednesday for the debt issuance, which will be comprised of a long-term loan from institutional lenders that is secured by collateral previously provided to existing creditors as well as by an additional private issuance of DBS' series B debentures.

The issuance received a credit rating of ilA- from S&P Maalot Ltd. and is subject to approvals from DBS' financing banks.

Proceeds will be used for the early repayment of NIS 400 million of existing bank loans, with the balance funding DBS' operations.

Bezeq also authorized DBS to amend or terminate its current arrangements with its financing banks, including to repay all of its outstanding long-term bank loans and to enter into new agreements with individual banks for an ongoing credit line. Repaying the bank loans is a condition for the new debt issuance to occur.

Bezeq said that the issuance of additional debt is in its and DBS' best interest because it will allow DBS to replace current debt with a more convenient repayment schedule, thereby improving cash flow. In addition, the early repayment of existing bank loans will allow DBS to cancel current restrictive covenants that limit DBS' financial flexibility.

DBS is a subsidiary of Bezeq, a telecommunication provider based in Tel Aviv. B Communications is based in Ramat Gan, Israel.

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