Israel’s Spacecom Could Finally Have a Buyer in IDB

Troubled Israeli satellite communications company Spacecom could finally have a buyer, but at a much lower price tag than it sought last year.

Last week, Israel-based holding company IDB made an offer for a controlling stake in Spacecom, offering U.S.$45.75 million for a 54.7% undiluted stake and an equity infusion of as much as U.S.$11.45 million. According to a report published on calcalist.com, further negotiations have resulted in IDB’s subsidiary, Discount Investment Corporation, agreeing to an equity infusion of up to U.S.$34 million.

Spacecom, operator of the Israeli AMOS communication satellites, is a subsidiary of Eurocom Group, the controlling stakeholder of Israel’s largest telecommunication provider, Bezeq. Together with its subsidiaries, Eurocom and its co-owner Shaul Elovitch owe a debt of around U.S.$420 million to institutional creditors, including Israel’s three largest banks.

Spacecom’s AMOS-6 satellite was destroyed in 2016 in a pre-launch explosion, causing the company to lose a U.S.$95 million leasing deal with Facebook, as well as a planned U.S.$285 million acquisition by Shanghai-listed telecommunication technologies supplier Beijing Xinwei Technology Group Ltd. Spacecom was also forced to lease a replacement satellite from Hong Kong-based AsiaSat at U.S.$22 million a year.

Last week, Spacecom announced it has contracted with U.S. satellite manufacturer Space Systems Loral (SSL), a subsidiary of Maxar Technologies, to build AMOS-8, intended to replace AMOS-6. The company does not have the money to finance the U.S.$112 million deal and stated that it intends to raise at least U.S.$150 million from the public, from institutional investors, and from banks.