Bethel Finance: Suny, Scailex downgraded on Tao debt deal

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Bethel Finance news:

Midroog Ltd. has cut its bond ratings for Suny Electronics Ltd. (TASE: SUNY) and Scailex Corporation (TASE: SCIX; Pink Sheets:SCIXF) after Tao Tsuot Ltd. (TASE: TAO-M) announced progress in its debt settlement with its bondholders. Ilan Ben-Dov controls all three companies.

Midroog cut Scailex's rating from A3 to Baa1 with a "Negative" horizon, and reiterated Suny's Baa2 rating, but lowered its outlook to "Negative" with the possibility of a rating downgrade in the future. Midroog said that Scailex's downgrade was due to the cumulative weakness in the business and financial position of its holding, Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), whose Aa3 rating was recently put on a watchlist because of its worsening business environment risks and inadequate handling of the changes in the market.

Midroog said that Suny's outlook was downgraded in part because of the downgrade of Scailex's credit rating. It said, "Suny's rating is based on its controlling interest in Scailex and its 1.4% holding in Partner… We believe that the weakening of the ability of Scailex to service it debt affects Suny as well, since it largely depends on dividends from Scailex to service its commitments."

Suny owns 78.71% of Scailex, which owns 44.5% of Partner. The two companies own 46% of Partner altogether.

Earlier today, Tao announced that media reports about the new structure of its debt settlement were partial and misleading, and that the TASE therefore suspended trading in Tao's share until Sunday, when the company will publish a detailed announcement of the new structure.

Tao said that it was in talks with its bondholders on a new debt settlement, and that the first meeting with Ben-Dov had been scheduled for Saturday night, December 10. Media reports claim that he will inject tens of millions of shekels into the company and replace its current bond series with new ones with a longer repayment schedule. In addition, a lien will be placed on 15-25% of Suny's shares.

In July, Ben-Dov offered Tao bondholders 50% of Suny, and through it, control of Partner. In exchange, the bondholders would convert the NIS 423 million in bonds into a 24% equity holding in Tao, which would give it control of Suny.