Elliott Welcomes Bezeq’s Constructive Response and Proposes Specific Steps to Build on Momentum
TEL AVIV, Israel and LONDON, February 6, 2018/PRNewswire/ —
In response to Interim Chairman Granot‘s letter, Elliott outlines recommendations for independent Director selection process and minimum number of new Independent Directors
Elliott reiterates its view that all Directors implicated by the ISA investigation resign with immediate effect
Elliott Advisors (UK) Limited (“Elliott”) today responded to Bezeq’s Interim Chairman David Granot in writing, following Granot’s public commitment to corporate governance reform at Bezeq. In its letter, Elliott outlines steps to further increase investor confidence, building upon recent support from major Israeli investors for a transparent and professional process to propose a minimum number of new independent Directors for election to the Board, including but not limited to the appointment of a recognised, international executive search firm and a commitment to consult with shareholders prior to appointing any new Directors. Elliott’s letter calls upon Chairman Granot to “build on this momentum and to seize the opportunity to drive real, lasting change at Bezeq.”
The text of the letter can be read in full below.
Founded in 1977, Elliott Management Corporation is one of the oldest private investment firms of its kind under continuous management. The firm’s investors include pension funds, private endowments, charitable foundations, family offices, and employees of the firm. Elliott Advisors (UK) Limited is an affiliate of Elliott Management Corporation.
February 6, 2018
Bezeq The Israel Telecommunication Corporation Ltd.
The Triangular Tower
3 Azrieli Center
Tel Aviv 61620, Israel
Attention: David Granot, Interim Chairman of the Board of Directors
Dear Mr Granot,
Thank you for your letter of January 29th. We are pleased to read of your commitment to reforming Bezeq’s corporate governance and that you plan to propose new candidates for election to the board at the annual shareholders’ meeting in April or May 2018.
Given the scale of the current governance problems at Bezeq, we believe it is critical that the new Directors who are proposed are done so via a transparent and professional process, resulting in high calibre candidates who can act independently in the best interests of Bezeq and all its stakeholders. We would encourage that you publicly articulate the steps that you intend to take towards achieving this goal. Doing so would, in our view, significantly increase investor confidence, both domestically and internationally. We would recommend that all of the following steps be taken:
- Commit to an intention to recruit at least 5 new independent Directors to be placed in nomination at either the annual shareholders’ meeting to be held no later than May 2018, or at a special meeting prior to that;
- Appoint a recognised international executive search firm, with a presence in Israel, to assist with the process; and
- Commit to consulting with shareholders prior to finally determining the proposed Directors.
We are happy to work with you throughout this process. We have a long track record of successful, positive engagement with companies seeking to improve their governance. We are eager to draw upon that experience to help you strengthen Bezeq’s board.
We also reiterate our view that all Directors implicated by the ISA investigation and/or affiliated with Eurocom should announce their resignations, effective immediately, from Bezeq and all its subsidiaries.
We would also like to address the final comment of your letter, in which you assert, “The corporate structure of the controlling shareholder of a company is not an issue for the Board to deal with.” We believe that Bezeq itself has a significant and legitimate interest in the ongoing negotiations over the ownership and control of its largest shareholder. This has manifested itself recently in Bezeq’s filing to become a party to the main liquidation motion filed by the court (which motion has already been granted). We also note the disproportionate influence Eurocom has upon Bezeq’s governance and management.
Since we wrote to you on January 16th we have been encouraged by both the reaction within the investment community as well as the wider public discussion, both domestic and international. It has been particularly encouraging to see major Israeli investors calling for a transparent process to bring about reform of the company’s corporate governance. This positive reaction to the prospect of meaningful change demonstrates a strong base of support for governance reform. We urge you to build on this momentum and to seize the opportunity to drive real, lasting change at Bezeq.
Elliott Advisors (UK) Limited
Source: Elliott Advisors (UK) Limited