Bezeq Israel Telecom cuts dividend, names interim directors
By Tova Cohen
TEL AVIV, March 7 (Reuters) - Bezeq Israel Telecom plans to cut its biannual dividend to 70 percent of net profit, from the 100 percent paid previously, to bolster its finances.
The company, which is being investigated by the Israel Securities Authority (ISA) over possible fraud and financial reporting offences, also said it had approved appointment of two interim directors to replace board members who have stepped down as a result of the investigation.
"The board of directors sees importance in maintaining a balance between securing the company's financial strength and stability, while preserving its 'AA' credit rating over time, and providing shareholders with value by distributing dividends," Bezeq said, referring to the new dividend policy.
The board's interim appointments follow the departure of controlling shareholder Shaul Elovitch and his son, Or, who were arrested last month along with then CEO Stella Handler in connection with the investigation.
Shaul and Or Elovitch, Handler, the company and its executives all deny wrongdoing.
The Elovitches will be replaced on an interim basis by former Bezeq chairman Shlomo Rodav and Doron Turgeman, CEO of Internet Gold, who were nominated by shareholder B Communications (Bcom).
Rodav and Turgeman will serve on the board until a general shareholder meeting is held, probably in early May, at which the company plans to appoint eight directors, in addition to the three external directors currently on the board.
Bcom and Internet Gold are subsidiaries of Eurocom, the holding company through which Shaul Elovitch controls Bezeq.
Barclays analyst Tavy Rosner said the 70 percent dividend cut seems overly conservative "unless the company expects a deterioration of its financial situation".
Bezeq shares were down 2.4 percent in afternoon trade.
Rosner added that one of the attractions of Bezeq for investors was its robust dividend yield despite the regulatory and competitive uncertainties
Bezeq last week named Yakov Paz as interim CEO while Handler remains under investigation.
A group of investors led by U.S.-Israeli businessman Naty Saidoff has offered to buy indebted Eurocom. The offer has been accepted by Eurocom's creditors and submitted to court for approval.
Amid a 29 percent drop in Bezeq's shares last year, activist investor Elliott, which has a 4.8 percent stake, called for the resignation of all Bezeq directors implicated in the investigation and those affiliated with Eurocom.
Advisory firm Entropy, representing certain Israeli institutional investors, has submitted a request to call a special shareholder meeting to appoint three external directors to the board, Bezeq said. (Additional reporting by Steven Scheer Editing by Louise Heavens and David Goodman)
