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Offering of Series D Bonds - October 2009

Offering of Series D Bonds - October 2009.

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Offering of Series D Bonds - October 2009

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  1. Offering of Series D Bonds - October 2009

  2. This presentation does not constitute an offer for the purchase or sale of securities of the Company or an invitation to receive bids as stated, and its sole intent is to furnish information. This presentation was prepared by Scailex Corporation Ltd. (“the Company”). The information contained in this presentation and all other information that shall be conveyed during the presentation of the presentation (“the Information”) is being presented solely for the sake of convenience. The Information does not constitute a basis for making investment decisions, does not constitute a recommendation or opinion, and should not substitute for a potential investor’s sound judgment. That stated in this presentation and all matters pertaining to the analysis of the Company’s operations is merely a summary. To obtain a complete picture of the Company’s operations and of the risks with which the Company is contending, the Company’s detailed reports to the Israeli Securities Authority and to the Tel-Aviv Stock Exchange should be scrutinized. The Company is not responsible for the completeness and accuracy of the Information and shall not bear any liability for any damages and/or losses that are liable to be caused as a result of use of the Information. In any case, that stated in the Company’s books and/or official publications prevails over any Information contained herein. This presentation contains forward-looking information, as this term is defined in the Securities Act, about forecasts, objectives and assessments, estimates and other information relating to future events and/or matters, the achievement of which is not certain and is not under the Company’s control. Forward-looking information does not constitute a proven fact and is based solely on the Company’s subjective assessment. The principal facts and data that were used as a basis for this Information are facts and data pertaining to the current position of the Company and of Partner and of their businesses, facts and data concerning the current situation of the operating segments in which the Company and Partner are engaging in their regions of activity, and macro-economic facts and data, all of which are as known to the Company at the time that this preparation was prepared. The forward-looking information included in this presentation is based, to a significant extent, in addition to information in the Company’s possession, on the Company’s current expectations and assessments about future developments in each of the said parameters, and on the interactions between such developments. The realization or non-realization of the forward-looking information will be influenced, inter alia, by risk factors that are characteristic to the Company’s operations, and by developments in the general environment and in those external factors that affect the Company’s operations, which cannot be pre-assessed and are not under the Company’s control. There is no certainty that the Company’s expectations and assessments will indeed materialize, and the results of the Company’s operations are liable to materially differ from the results assessed or implied in the forward-looking statements, inter alia, due to a variance in any of the above factors. Therefore, the readers of this presentation are hereby cautioned that the Company’s actual results and achievements in the future are liable to materially differ from those presented in the forward-looking information presented in this presentation. Furthermore, the forward-looking forecasts and assessments are based on data and information in the Company’s possession at the time that this presentation was prepared and the Company is not undertaking to update and/or revise any such forecast and/or assessment so as to reflect events and/or circumstances that shall transpire subsequent to the preparation of this presentation. Forward-looking Information

  3. Structure of the Group Mr. Ilan Ben Dov (through wholly controlled corporations) 78.77% Suny Electronics Ltd. (TASE) 0.95% 82.49% Scailex Corporation Ltd. (TASE) 0.67% 45.00% Partner (NASDAQ/TASE) Dynamica Cellular 3

  4. Scailex will acquire the entire holding of Partner being sold. “As is” transaction (no representations), subject to suspending conditions and agreed compensation in the event that the transaction is not closed. Purchase price – NIS 67.025 per share (shekel price) + LIBOR interest until the closing of the transaction. Concurrent with the acquisition, Scailex will sell about 6.3% of the Partner shares being acquired to Leumi Bank (4.99%), Migdal (0.68%) and Excellence (0.64%). (Excellence is purchasing with the intent of selling to a foreign institutional body). Suspending conditions for closing the transaction (expected to be fulfilled by the end of October/beginning of November): Approval of the Antitrust Commissioner - received Approval of Hutchison’s general assembly – received Approval of the Ministry of Communications – in process Vendor financing* Volume – USD 300 million (some NIS 1,150 million) Repayment of the principal – 4.5 years (bullet payment) Annual interest of 2% (payable bi-annually in USD) Key Points of the Partner Transaction - General 2 * For full commercial and legal particulars, see the Company’s reports to the public.

  5. Sources for the Transaction Financing of the transaction Straight bond Convertible bond Short-term bank financing Financing backed by operations Vendor financing Equity Sale to partners Liens on the transaction closing date: 33.0% pledged Partner shares 11.1% free Partner shares 45.0% of Partner’s shares held by Scailex * Some NIS 1,406 million of the straight bonds were issued to the public in September 2009 and are being traded on the Tel-Aviv Stock Exchange.. ** Not including convertible bond option to partners. Cash balance in Scailex – NIS 262 million

  6. Current (New) Offering – Series D • General – Scope of the current recruitment – up to NIS 280 million (15% additional might be possible if there is an oversubscription). • Purpose of the recruitment – longer spread of the debt repayment. • Conditions of Series D – linked bonds • Average duration: 4.1 years. • Payments of principal – in 4 annual payments 2012 – 2015. • Interest – according to tender – in biannual payments 2010 – 2015. • Maximum interest – 6.2%. • Pledge of Partner shares at the rate of 100% of the bond principal, according to the value on the issue date, with price adjustments for a dividend beyond the profits suitable for distribution. • The sureties (the pledged shares) for the series will remain in full force until the repayment in full. • Rating: A- assigned by Maalot (stable outlook) for the issue of a new series of bonds (up to NIS 400 million). • Main undertakings • The Company will distribute dividends from the profits suitable for distribution that accumulated during the 4 quarters preceding the distribution. • For two years after the issue, the Company will not carry out material real investments other than in the telecom sector.

  7. Partner’s operations Partner’s profitability rate will be sustained – NIS 1.2 billion per annum. Regulatory changes, if any, will begin to have an impact as of 2011. Partner will continue to distribute a quarterly dividend to its shareholders. Today, the ratio of debt/EBITDA – Partner 1:0.9, compared with Cellcom 1:1.65, will enable the company to increase its debt by another NIS 1.4 billion before it reaches Cellcom’s ratio (the accepted ratio in the sector - 1:2 and above). Scailex’s operations Scailex’s profitability (import and marketing of Samsung handsets) will be sustained – NIS 120 million. Dynamica (cellular retail operations for Cellcom) will cease to provide services to Cellcom on 30.6.2010. Debt servicing at the level of Scailex The bank debt is expected to be repaid by the second half of 2010 from dividends of 2009 and 2010 (by mid-2011 without a capital reduction). The annual flow from Partner of close to NIS 500 million and from the Samsung operations, of some NIS 120 million, will service the debt. Scailex expects to distribute NIS 100 million per annum to its shareholders (NIS 50 million without a capital reduction in Partner). Basic Assumptions for Debt Servicing in Scailex

  8. Forecasted Sources and Uses Scenario 1 – with capital reduction * Flow from current operations and flow from the sale of Dynamica in 2010 (assuming that it will be sold)** According to market value per share of NIS 74.44 of October 13, 2009.

  9. Structure & Financingof the Transaction Scenario 1 – with capital reduction NIS millions Net debt (year end) (the trend line presents the value of the shares pledged against the debt (as per the transaction price) Debt service (principal and interest) NIS millions 9

  10. Forecasted Sources and Uses Scenario 2 – without capital reduction * Flow from current operations and flow from the sale of Dynamica in 2010 (assuming that it will be sold)** According to market value per share of NIS 74.44 of October 13, 2009.

  11. Structure & Financingof the Transaction Scenario 2 – without capital reduction NIS millions Net debt (year end) (the trend line presents the value of the shares pledged against the debt (as per the transaction price) Debt service (principal and interest) NIS millions 11

  12. BondDetails * The figures concerning the free shares and the cash balance at the end of the period are according to a scenario including a capital reduction in Partner as presented above. NIS millions Series A Series C Convertible bond Cash closing balance Series B Series D Value of pledged shares against bonds 12

  13. Summary Scailex possesses high financial strength, which has consistently sustained profitable operations over the years. Financial strength is improved subsequent to the acquisition transaction, based on the said flows, which should generate some NIS 600 million/annum for Scailex. “Stable” collateral – Partner shares – first time in Israel! Short-term bank loans – the balance of the bank debt secured by shares will be repaid in full by the time the bond principal repayments begin. Vendor loan at the volume of USD 300 million, with dollar interest at 2% per annum for 4.5 years (bullet). Stable operative operations – constituting an additional recourse. The controlling shareholders hold 82.5% of Scailex. Scailex will be able to boost its equity in the future by offering share capital to the public/strategic investor or by a sale of Partner shares to a public/strategic investor (telecom company can be controlled even with a holding of 26% and more). Over time, the bond rating might be raised as the business plan progresses. Under the reasonable assumption that the transaction will be consummated by 1.12.09, the Company will benefit from the H2 2009 profits.

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