Cellcom Israel Ltd. Announces Controlling Shareholder Announcement

Rhea-AI Summary

Cellcom Israel Ltd. (NYSE: CEL) announced that its controlling shareholder, Discount Investment Corporation Ltd. (DIC), faces immediate repayment demands from debenture holders of IDB Development Corporation Ltd. DIC is pledging its shares to IDB debenture holders and seeking court intervention to enforce these pledges. This situation arises under the Israeli Bankruptcy and Economic Rehabilitation Law, 2018. Potential impacts on Cellcom may involve challenges in capital access and operational continuity depending on the outcomes of the ongoing legal motions.

Positive

• - The company continues to operate under a well-defined communications infrastructure.

Negative

• Controlling shareholder DIC facing immediate repayment demands from debenture holders, raising liquidity concerns.
• Potential for a receiver to be appointed for DIC’s assets could adversely affect Cellcom's operational stability.
• Legal motions filed may lead to increased financial instability for Cellcom if foreclosures occur.

NETANYA, Israel, Sept. 23, 2020 /PRNewswire/ -- Cellcom Israel Ltd. (NYSE: CEL) (the "Company") announced today that its indirect controlling shareholder, Discount Investment Corporation Ltd., or DIC, announced that the debenture holders of certain debentures series of IDB Development Corporation Ltd., or IDB, a company controlled by the Company's controlling shareholder, resolved to call for the immediate repayment of the full outstanding balance of certain of IDB's debentures, to enforce the pledges provided in favor of IDB debenture holders, including the pledge on DIC's shares and filed motions to the court for the appointment of a receiver to that end. Additional motion was filed to the court by holders of another series of IDB debentures to take certain receivership actions against IDB. All motions are based on the Israeli Bankruptcy and Economic Rehabilitation Law, 2018.

For details regarding the pledge of DIC's share capital as collateral to IDB and its debenture holders ,see the Company's annual report on Form 20-F dated March 23, 2020, or 2019 Annual Report, under "Item 7 – Major Shareholders and Related Party Transactions Major Shareholders – A. Major Shareholders".

For details regarding the Ministry of Communications prior approval regarding the transfer of over 10% of the Company's means of control or the transfer of control over the Company, directly or indirectly (including by way of creating a pledge which if foreclosed, will result in the transfer of shares), see the Company's 2019 Annual Report under "Item 4 - Information on the Company – B. Business Overview – Government Regulations Cellular Segment".

The Company shall continue to report material developments, as and to the extent such developments occur.

About Cellcom Israel

Cellcom Israel Ltd., established in 1994, is a leading Israeli communications group, providing a wide range of communications services. Cellcom Israel is the largest Israeli cellular provider, providing its approximately 2.734 million cellular subscribers (as at June 30, 2020) with a broad range of services including cellular telephony, roaming services for tourists in Israel and for its subscribers abroad, text and multimedia messaging, advanced cellular content and data services and other value-added services in the areas of music, video, mobile office etc., based on Cellcom Israel's technologically advanced infrastructure. The Company operates an LTE 4 generation network and an HSPA 3.5 Generation network enabling advanced high speed broadband multimedia services, in addition to GSM/GPRS/EDGE networks. Cellcom Israel offers Israel's broadest and largest customer service infrastructure including telephone customer service centers, retail stores, and service and sale centers, distributed nationwide. Cellcom Israel further provides OTT TV services, internet infrastructure and connectivity services and international calling services, as well as landline telephone services in Israel. Cellcom Israel's shares are traded both on the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange (CEL).

For additional information please visit the Company's website http://investors.cellcom.co.il.

Company Contact Shai Amsalem Chief Financial Officer investors@cellcom.co.il Tel: +972-52-998-9735

Investor Relations Contact Elad Levy Investor Relations Manager investors@cellcom.co.il Tel: +972-52-998-4774

 

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SOURCE Cellcom Israel Ltd.

FAQ

What recent news has affected Cellcom Israel (CEL)?

Cellcom's controlling shareholder, DIC, is facing repayment demands from IDB debenture holders, impacting Cellcom's financial outlook.

How might the legal motions against IDB affect Cellcom (CEL)?

Legal actions could lead to asset foreclosures that negatively impact Cellcom's operations and financial stability.

What is the significance of the pledges made by DIC for Cellcom (CEL)?

The pledges indicate potential risks for Cellcom as DIC's financial issues could affect its ability to support Cellcom operationally.

When was the announcement regarding DIC's financial situation made in relation to Cellcom (CEL)?

The announcement was made on September 23, 2020.

What implications does the Bankruptcy Law have for Cellcom (CEL)?

The Israeli Bankruptcy and Economic Rehabilitation Law could lead to significant organizational changes for Cellcom if DIC's situation worsens.