Just a few weeks after Hong Kong-based Hutchison Whampoa Limited (HWL) revealed that two of its subsidiaries would not move forward with the acquisition of a stake in Israeli cellco Partner Communications, the latter’s current owners have argued that the sale should proceed as planned. As previously reported by CommsUpdate, in June 2012 HWL revealed it would pay Suny Electronic USD125 million for 75% of Israeli handset distributor Scailex Corp, which holds a 44.5% stake in Partner. However, towards the end of last month the Hong Kong outfit confirmed it would not advance the deal, with a press release issued by HWL noting: ‘The termination by Persall and Kelburgh [the two subsidiaries that were to buy the stake] was in exercise of their rights under the agreement on the grounds that conditions under the agreement have not been fulfilled.’
However, according to Reuters, Suny has claimed that HWL’s attempt to cancel the acquisition is not valid, with the report citing a letter from Suny and Scailex to the Hong Kong conglomerate as saying: ‘The acquisition is still in effect and the buyers are required to fulfil all of its obligations.’ Further, it is understood that the two Israeli companies have warned that HWL will be responsible for any damages they and their share and bondholders suffered from the cancellation notice, with the companies stating that they intend to ‘take all necessary measures to protect against negative consequences and damages related to the cancellation notice, and reserve the right to remedies available to them against the buyers, including enforcement and/or compensation’.
Scailex is currently thought to have debts of USD760 million, including USD300 million owed to HWL, a significant portion of which relate to its acquisition of Partner back in 2009; in August that year Scailex agreed to acquire a 51.2% stake in Partner for USD1.38 billion from HWL, and the sale closed that October. The report notes that HWL had agreed to extend repayment of the USD300 million loan it made to Scailex at the time of that deal by three years, to April 2017, but now it is believed the loan will have to be repaid by 2014. However, if the loan cannot be settled it is understood that Hutchison will receive a 12% stake in Partner.