SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15a-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Report on Form 6-K dated

 

July 19, 2017

 

(Translation of Registrant's Name Into English)

 

8 Amal Street

Afeq Industrial Park

Rosh Ha'ayin 48103

Israel

(Address of Principal Executive Offices)

 

(Indicate by check mark whether the registrant files or will file annual reports

under cover of Form 20-F or Form 40-F.)

 

Form 20-F ☒  Form 40-F ☐

 

(Indicate by check mark whether the registrant by furnishing the

information contained in this Form is also thereby furnishing the information to the

Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

Yes ☐  No ☒

 

(If "Yes" is marked, indicate below the file number assigned to the

registrant in connection with Rule 12g3-2(b): 82-                )

 

This Form 6-K is incorporated by reference into the Company's Registration Statements on Form S-8 filed with the Securities and Exchange Commission on December 4, 2002 (Registration No. 333-101652), September 5, 2006 (Registration No. 333-137102), September 11, 2008 (Registration No. 333-153419), August 17, 2015 (Registration No. 333-206420), November 12, 2015 (Registration No. 333-207946) and on March 14, 2016 (Registration No. 333-210151)

 

Enclosure: Shelf Offering Report - Partner Communications Company Ltd.

July19, 2017

Partner Communications Company Ltd.

(hereinafter: "the Company" or "Partner")

 

 

Pursuant to the Company's shelf prospectus of June 3, 2015 (hereinafter: "the Shelf Prospectus" or "the Prospectus"), the validity of which was extended until June 2, 2018, as reported by the Company on May 22, 2017 (reference no.: 2015-02-038100 and 2017-02-042673, respectively), and pursuant to the provisions of the Israel Securities Regulations (Shelf Offering of Securities), 5766 – 2005 (hereinafter: "Shelf Offering Regulations"), the Company is pleased to publish herewith a shelf offering memorandum for the issue and listing of the Offered Securities, as defined hereunder (hereinafter: "the Shelf Offering Memorandum" or "the Offering Memorandum" or "the Memorandum") for trading on the Tel-Aviv Stock Exchange Ltd. (hereinafter: "the TASE"):

 

American Depositary Shares (hereinafter: "ADS") of the Company (with each ADS representing one share of the Company), which are listed for trading on the NASDAQ Capital Market under the ticker "PTNR." Additionally, shares of the Company are listed for trading on the  TASE under the ticker "Partner" and three series of debentures of the Company listed for trading on the TASE under the symbol "Partner K3", "Partner K4" and "Partner K5" pursuant to a listing document by virtue of the provisions regarding dual listing in Chapter E.3. of the Israel Securities Law, 5728 – 1968 (hereinafter: "Securities Law") and the regulations instituted by virtue thereof. The Company's current reports are in accordance with the law in the United States and are in English, and are in accordance with the dual listing rules prescribed in Chapter E.3. of the Securities Law and the regulations instituted by virtue thereof. The Company shall also continue to report according to the dual listing rules subsequent to the issuance pursuant to this Shelf Offering Memorandum.

 

As set forth in section 1.3.4 of the Shelf Prospectus, the Company undertook that as of the date of issuance of its debentures to the public, solely in Israel, the Company shall be subject, to reporting duties in accordance with the hybrid disclosure model, as defined in the Shelf Prospectus. Therefore, as of the date of issuance of the debentures (Series F) to the public, this model will apply. According to the model, the Company is required to examine the existence of "warning signs" as defined in the Securities Regulations (Periodic and Immediate Reports), 5730-1970, and to the extent that there are warning signs it must provide disclosure as specified in section 1.3.7 of the Shelf Prospectus¹.

 

The Memorandum includes supplementary information (either in the Memorandum or by way of referral) about material developments in the Company since the date of the Shelf Prospectus, and additional information that is required pursuant to the United States Securities Act of 1933, as amended from time to time (hereinafter: "Securities Act") and the rules and regulations of the United States Securities and Exchange Commission that would have applied, had the offering of securities as stated been registered under the Securities Act using the Form F-3 registration statement, including updated financial information based on the rules and requirements of the United States Securities and Exchange Commission in Item 8 of Form 20-F, and this, in addition to the details required pursuant to the Shelf Offering Regulations. In accordance with the opinion that the Company received from a US law firm (hereinafter: "the US Lawyer"), the Memorandum complies with the requirements of Form F-3 that would be relevant to the Company pertaining to the registration of the offered securities under the Securities Act, if the Company were to offer the offered securities under a registration statement filed pursuant to the Securities Act, apart from the sections of the Offering Memorandum that are in Hebrew, and apart from the fact that particular clauses and appendices would have been included in Form F-3 that are not included in the Offering Memorandum and that are technical in nature and are immaterial to the matter of offering securities to the public in Israel.

The offering of the offered securities by the Company within the scope of this Shelf Offering Memorandum (hereinafter: "the Offered Securities") shall be done solely in Israel and shall not be done in the United States and/or to US Persons, as this term is defined in Regulation S under the Securities Act, as amended from time to time (hereinafter: "Regulation S"), and this, according to the conditions of the exemption from the listing requirements pursuant to Category 1 of Regulation S.

 

The Offered Securities may be resold in reliance on Rule 904 of Regulation S, whereby, the Offered Securities may be resold on the TASE by any person (excluding resales by the Company, a distributor, any of their respective affiliates (except any officer or director who is an affiliate solely by virtue of holding such position), or any person acting on behalf of any of them), without imposing any blocking period or other restriction, provided that: (1) the offering is not made to a person in the United States; (2) the seller and anyone acting on its behalf did not know that the transaction has been organized in advance with a purchaser in the United States; and (3) No  Directed Selling Efforts, as this term is defined in Regulation S, shall be done in the United States by the seller, an affiliate or by any person acting on its behalf.

 

The Company has provided the TASE with an opinion of the US Lawyer according to which, based on the assumptions, reservations and limitations in the opinion, the offering in accordance with the Shelf Offering Memorandum is exempt from the registration requirements of the Securities Act and that in accordance with Regulation S the securities that are offered according to This Offering Memorandum will be eligible for  resale on the TASE by any person (except as and subject to that detailed above).

 

Any purchaser of the Offered Securities pursuant to the Memorandum shall be deemed as a party who declared: (i) that it is not located in the United States and that it is not a US Person; (ii) that it is not purchasing the Offered Securities for or on behalf of a US Person or any person located in the United States; (iii) that it was not staying in the United States when it submitted an application to purchase or when it purchased the Offered Securities; and (iv) that it is not purchasing the Offered Securities with an intention to carry out a "distribution" of the said Securities in the United States (as this term is defined in the US securities laws).

Pursuant to that stated above, the "Distributors" (as this term is defined in footnote 14 of section 13.1 of the Memorandum) have undertaken that they shall offer the Offered Securities solely in Israel and only to persons that are not a US Person and that they did not and shall not perform any action or publish any advertisement in the United States pertaining to the promotion of the sale of the Offered Securities.

 

Solely the laws of the State of Israel shall apply to this Memorandum and no other laws whatsoever shall apply; solely the competent courts in Israel and they alone shall have sole jurisdiction in relation to any matter pertaining to the said matters; and the offerees, by consenting to purchase the Offered Securities, are accepting this sole jurisdiction and this choice of law.

 

The Shelf Prospectus and the Shelf Offering Memorandum were not filed with the United States Securities and Exchange Commission. The Offered Securities shall not be registered under the Securities Act in the United States, and any person purchasing Securities pursuant to this Shelf Memorandum shall be allowed to offer, sell, pledge or transfer the said Securities in any other way solely: (i) pursuant to Regulation S; (ii) pursuant to an effective registration statement filed under the Securities Act; or (iii) pursuant to an exemption from the registration requirements of the Securities Act. The Company is not undertaking to register the Securities for offer or sale in the United States under the Securities Act.

 

A decision to purchase the Offered Securities should be reached solely relying on the information contained (including by way of referral) in the Shelf Prospectus and in the Shelf Offering Memorandum. The Company did not allow any person or other body to furnish information that differs from that specified in the Shelf Prospectus or in this Memorandum. The Shelf Prospectus and This Memorandum do not constitute an offering of Securities in any other country apart from in the State of Israel.

 

The terms used in this Shelf Offering Memorandum shall have the definitions ascribed to them in the Shelf Prospectus, unless otherwise stated.

1.	The Offered Securities

 

1.1

Up to NIS 300,000,000 par value,  registered debentures (Series F) of NIS 1 par value each, bearing fixed  annual interest at a  rate to be determined in the tender and not to exceed 2.16% and are not linked (principal and interest)2 to any linkage base (hereinafter: "the Debentures (Series F)" or "the Debentures").

 

1.2

The principal of the debentures will be repayable in five equal annual payments at a rate of twenty percent each to be paid on June 25 of each of the years 2020 to 2024 (inclusive).

 

1.3

The balance of the unpaid principal of the Debentures, as it shall be from time to time, shall bear fixed annual interest at a rate to be determined in the tender (hereinafter:  "the Base Interest"). The interest in respect of the Debentures will be paid twice a year, on December 25 and on June 25 of each of the years 2017 to 2024 (inclusive) for the six (6) month period ended on the payment date (excluding the first interest period as detailed below) so that the first payment will be paid on December 25, 2017 and the last payment will be paid on June 25, 2024. All this except for payment in respect of the first interest period that will be paid on December 25, 2017, in respect of which the interest will be paid for the period beginning on the trading day following the date of the tender to the public and ending on the first payment date of the interest, calculated on the basis of 365 days a year, according to the number of days during this period. The interest payment to be paid on each interest payment date will be calculated according to the annual interest rate divided by 2 (the number of payments per year). The final payment of the interest on the principal of the Debentures (Series F) shall be paid together with the final payment on the principal's account of the Debentures (Series F), against the delivery of the Debenture certificates (Series F) to the Company.

 

1.4

In the framework of an immediate report to be published by the Company on the results of the tender for the issuance of the Debentures (Series F), the Company will announce the interest rate to be determined in the tender, the interest rate for the first interest period of the Debentures (Series F) and the annual and semi-annual interest rate to be paid.

 

---

² In accordance with the provisions of the TASE rules and regulations, it is not possible to change the linkage method.

 

1.5

As part of the Deed of Trust in connection with the Debentures (Series F) (as defined in section 6.1 below), it was determined that subject to the terms set forth in section 2.4 of the Deed of Trust, the Company may, from time to time, at its sole discretion, without obtaining approval from the trustee for Debentures (Series F) and /or the holders of the Debentures (Series F) existing at that time, to expand the Debentures (Series F) (whether in a private offering, whether as part of a prospectus, whether pursuant to a shelf offering report or otherwise), including to a related holder, at any price and in any manner that the Company deems fit, including a discount or premium rate (including no discount or no premium) that differs from the discount rate of the debentures outstanding at that time (insofar as there will be). If the discount rate to be determined for the Debentures (Series F) due to the increase in the series will be different from the discount rate of the Debentures (Series F) outstanding at that time, the Company will, prior to increasing the series of Debentures (Series F) apply to the tax authority to receive its approval that in respect of the withholding tax from the discount fees in respect of the said Debentures, a uniform discount rate will be determined for the said Debentures according to a formula that weighs the various discount rates in Series F, if any, in accordance with the provisions set out in section 2.4.1 of the Deed of Trust.

 

1.6

The Debentures (Series F) that will be in circulation and additional debentures of the same series, which will be issued (if any) as stated in section 1.5 above, shall constitute (from the date of their issuance) one series for all intents and purposes.

 

1.7

If, after the initial issuance date of the Debentures (Series F), the series of Debentures will be extended by the Company, the Debenture holders (Series F) which will be issued as part of the expansion of the series, will not be entitled to receive payment of principal and/or interest in respect of the Debentures (Series F) for which the determining date for payment is prior to the issue date.

 

2.	Details of the Offering

 

2.1

The Debentures (Series F) are being offered to the public in 300,000 units of NIS 1,000 par value each (hereinafter: "the Units"), for a consideration of NIS 1,000 per unit, by way of a tender, on the annual interest rate to be borne by the Debentures (Series F), which shall not exceed 2.16% (hereinafter: " the Maximum Interest Rate"). The Debentures (Series F) will be offered by means of a uniform offering, as stated in the Israel Securities Regulations (Mode of Offering of Securities to the Public), 5767 – 2007 (hereinafter: "the Mode of Offering Regulations")

 

2.2

Any subscriber must specify in its order the number of Units that it wishes to purchase and the interest rate that it is bidding, which shall not exceed the Maximum Interest Rate. An order for the purchase of Units that shall be submitted within the scope of the tender and for which the interest rate specified therein exceeds the Maximum Interest Rate , or that did not specify an interest rate per unit, shall be nullified and shall be deemed as if not submitted.

 

2.3

Any subscriber may submit up to three (3) orders at different interest rates (which shall not exceed the Maximum Interest Rate), as stated, shall not be less than the Minimum Price), which shall be quoted at increments of NIS 0.01%; i.e., it shall be possible to tender bids at interest rates of 2.16%, 2.15%, 2.14% and so forth. Any order of Units that tenders a bid not quoted in increments of 0.01% shall be upwardly rounded to the next increment.

 

2.4

Orders may be submitted for the purchase of whole Units only. Any order that shall be submitted for any fraction of a unit shall be deemed an order being submitted solely for the number of whole Units specified therein, and the fraction of a unit specified in the order shall be deemed as if not specified therein ab initio.

 

2.5

Subject to any law, the orders for the purchase of the Debentures are irrevocable. Every order shall be deemed an irrevocable undertaking on the part of the subscriber to accept the Debentures that shall be allotted to it as a result of full or partial acceptance of its order, and to pay the full price of the Debentures that it is entitled to receive pursuant to the terms of the Shelf Prospectus and the Shelf Offering Memorandum, through the Issue Coordinator (as this term is defined hereunder) pursuant to the terms of the Shelf Prospectus and the Shelf Offering Memorandum.

 

2.6

The offering of the Securities pursuant to the Shelf Offering Memorandum is not secured by underwriting.

 

In this regard, "Subscriber" or "Applicant" – including a family member residing with the subscriber, and a Classified Investor that is ordering Shares pursuant to section 4 of the Memorandum.

 

2.7

The timeframe for submitting orders

 

The period for the submission of orders for the purchase of the Units offered to the public shall be opened on July 19 , 2017 (hereinafter: "the Day of the Tender" or "the Submission Date of the Applications"), at 10:30 a.m. (hereinafter: "Opening Time of the Subscription List") and shall be closed on the same day at 17:30 p.m. (hereinafter: "Closing Time of the Subscription List"), provided that the Closing Time of the Subscription List shall not be before seven (7) hours have elapsed, at least five (5) of which are hours of trading, since the publication time of the Offering Memorandum.

 

2.8

Order submissions

 

2.8.1

Orders for the purchase of the Units must be submitted to the Company using the customary forms for this purpose, either directly through the Issue Coordinator, Leader Underwriters (1993) Ltd., of 21 Ha-arba'a Street, Tel-Aviv (hereinafter: "the Issue Coordinator"), or through banks or other TASE members (hereinafter: "the Authorized Order Recipients"), by no later than the Closing Time of the Subscription List. The Authorized Order Recipients shall be responsible and liable to the Company and to the Issue Coordinator for the payment of the full consideration that shall be due to the Company in respect of orders submitted through them and that were fully or partially accepted.

 

2.8.2

Any order that shall be submitted to an Authorized Order Recipient on the Day of the Tender shall be deemed as submitted on that day if it shall be received by the Authorized Order Recipient by the Closing Time of the Subscription List, provided that the Authorized Order Recipient shall forward it to the Issue Coordinator and the Issue Coordinator shall receive it by one hour after the Closing Time of the Subscription Ltd; i.e., by 18:30 on the Day of the Tender (hereinafter: "the Deadline for Submissions to the Coordinator").

 

2.8.3

The Authorized Order Recipients shall forward the orders to the Issue Coordinator on the Day of the Tender by transmission of the applications to a digital safe or in sealed envelopes that shall remain sealed until the Deadline for Submissions to the Coordinator, and shall be inserted into a closed box, together with the orders that were submitted directly to the Issue Coordinator.

 

2.9

The tender proceedings, publication of the results and payment of the consideration

 

2.9.1

On the Day of the Tender, after the Deadline for Submissions to the Coordinator, the box shall be opened and the envelopes shall be opened, including the applications transmitted by a digital safe in the presence of a representative of the Company, a representative of the Issue Coordinator and an accountant, who shall supervise the proper conduct of the tender proceedings.

 

2.9.2

By 10:00 a.m. on the morning of the first trading day after the Day of the Tender, the Issue Coordinator shall deliver notice to the subscribers, through the Authorized Order Recipients through which the orders were submitted, about the extent of the acceptance of their orders. The notice shall specify the interest rate determined in the tender, the number of Units that shall be allotted to the subscriber and the consideration that it must pay for them. Upon receipt of the notice, and by 12:30 p.m. on that same afternoon, the subscribers whose orders for Units were fully or partially accepted, must transfer the consideration that must be paid for the Units in their orders that were accepted, to the Issue Coordinator, through the Authorized Order Recipients.

 

2.9.3

On the first day of trading after the Day of the Tender, the Company shall announce the results of the tender in an immediate report to the Israel Securities Authority and to the TASE.

 

2.9.4

The Company deems the deposit of the consideration of the issue in the Special Account, as this term is defined hereunder in section 2.11 of the Memorandum, as a transfer of the consideration to the Company, and the Company shall apply to the TASE to list the Debentures for trading on the basis of this.

 

2.10

Mode of determining the interest rate and the allotment to the subscribers

 

All of the Units for which purchase orders shall be accepted, shall be issued at a uniform interest rate per unit that shall be determined according to the results of the tender (hereinafter: "the Uniform Interest Rate"), and the method for allotting the Units shall be as follows:

 

2.10.1

If the inclusive number of Units included in the orders (including Units in purchase orders that were received from Classified Investors that engaged in an early commitment with the Company, as stated in section 4 of the Memorandum) that shall be accepted shall be less than the inclusive number of Units being offered pursuant to the Offering Memorandum, then all of the orders shall be accepted in their entirety and, in such instance, the Uniform Interest Rate shall be the Maximum Interest Rate specified in the Offering Memorandum. The balance of the Units, for which orders shall not be accepted, shall not be issued.

 

2.10.2

If the inclusive number of Units included in the orders (including Units in purchase orders that were received from Classified Investors that engaged in an early commitment with the Company, as stated in section 4 of the Memorandum) that shall be accepted shall be equal to or higher than the inclusive number of Units being offered to the public, then the Uniform Interest Rate shall be equal to the lowest interest rate at which orders were submitted for the purchase of all of the Units being offered pursuant to This Offering Memorandum (including orders submitted by Classified Investors) pursuant to the Offering Memorandum.

 

In such instance, the Units being offered shall be allotted as follows:

 

(a)

Orders quoting an interest rate higher than the Uniform Interest Rate – shall not be accepted;

 

(b)

Orders quoting an interest rate lower than the Uniform Interest Rate – shall be accepted in their entirety;

 

(c)

Orders (not including orders submitted by Classified Investors that engaged in an early commitment with the Company, as stated in section 4 of the Memorandum) quoting an interest rate that is equal to the Uniform Interest Rate – shall be accepted on a pro rata basis, so that each subscriber shall receive, out of the total of the offered Units that shall remain for distribution after accepting orders quoting an interest rate that is lower than the Uniform Interest Rate (and after accepting the orders of the Classified Investors that engaged in an early commitment with the Company, which shall order at the Uniform Interest Rate, as stated in section 4 of the Memorandum), a portion that is equal to the ratio between the number of Units that it ordered in an order quoting the Uniform Interest Rate and the inclusive number of Units included in all orders submitted to the Company that quoted the Uniform Interest Rate  (after deducting the shares of the Classified Investors that engaged in an early commitment with the Company, as stated in section 4 of the Memorandum);

 

(d)

The allotment to Classified Investors shall be done as specified in section 4 of the Memorandum.

 

2.10.3

If fractional Units shall be created as a result of the allotment of the Units according to the response to the tender as stated above, they shall be rounded, to the extent possible, to the closest whole unit. Surplus Units that might remain as a result of rounding as stated shall be purchased by the Issue Coordinator at the price per unit specified in the Offering Memorandum.

 

2.10.4

Each subscriber shall be deemed as if it committed in its order to purchase all of the Units that shall be allotted to it as a result of a partial or full acceptance of its order, according to the rules specified above in this section 2.

 

2.11

Special account

 

2.11.1

Shortly before the Day of the Tender, the Issue Coordinator shall open a special income-bearing trust account under the Company's name in a banking corporation (hereinafter: "the Special Account") and shall disclose the details of the Special Account to the Authorized Order Recipients. The Special Account shall be used for monies that shall be received.

 

2.11.2

The Special Account shall be managed exclusively by the Issue Coordinator for and on behalf of the Company pursuant to the provisions of section 28 of the Securities Law. The monies that shall be paid in respect of the orders that were fully or partially accepted by the Company shall be deposited in the Special Account. The Issue Coordinator shall invest the monies that shall accumulate in the Special Account in liquid, unlinked deposits bearing interest on a daily basis, to the extent that this shall be possible.

 

2.11.3

By no later than 12:00 p.m. on the second trading day after the Day of the Tender, the Issue Coordinator shall transfer the balance of the monies that shall remain in the Special Account to the Company, including the profits that accumulated in respect thereof, and this, against the transfer of certificates in respect of the Debentures to Mizrahi Tefahot Nominee Company Ltd. (hereinafter: "the Nominee Company") and crediting of the TASE member pursuant to the instructions of the Issue Coordinator.

 

In the event of cancellation of the tender, the Debentures (Series F) shall not be issued within the scope of the tender, they shall not be listed for trading on the TASE, and no monies shall be collected from the investors in connection with those Debentures.

 

3.	Additional allotment

 

The Company shall not execute an additional allotment, as defined in the Mode of Offering Regulations, pursuant to this Shelf Offering Memorandum.

 

4.	Classified Investors

 

Out of the Units being offered to the public as stated in this Shelf Offering Memorandum, early commitments for the purchase of 250,000 Units were given by Classified Investors³, as defined in Regulation 1 of the Mode of Offering Regulations (hereinafter: "the Classified Investors"), whereby, the Classified Investors shall submit orders in the tender for the purchase of Units constituting approximately 83.33% of the total Units being offered pursuant to the Shelf Offering Memorandum, as specified hereunder in this section 4.

 

The early commitments from Classified Investors were received according to the principles prescribed in the Mode of Offering Regulations.

 

In this section 4, "oversubscription" is the ratio between the amount of offered Units for which orders were submitted at the Uniform Interest Rate, and the quantity remaining for distribution (as defined below), provided that it exceeds one;

 

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³ "A Classified Investor" –one of the following: (1) a portfolio manager as its meaning in section 8(b) of the Advice Law, that purchases at its discretion for the account of a client; (2) a corporation that is wholly owned  by a classified investor, one or more, that purchases for itself or for another classified investor; (3) an investor as set forth in section 15A(b)(2) of the Securities Law 5728-1968 (hereinafter: "the Law"); (4) an investor as set forth in sections (1) through (9) or (11) of the First Appendix to the Law, that purchases for itself. In addition, a Classified Investor must undertake to purchase securities in an amount of no less that NIS 800,000.

"The quantity remaining for distribution" is the quantity of Units that were offered in the tender for the interest rate, in accordance with the Shelf Offering Memorandum, after deducting from it that quantity of securities for which orders were submitted at an interest rate that was lower than the Uniform Interest Rate.

 

Pursuant to the Mode of Offering Regulations, in the event of oversubscription, the allotment to Classified Investors shall be as follows:

 

(a)

if the oversubscription was up to five times higher than the quantity of Units offered to the public, then each Classified Investor shall be allotted 100% of the quantity that it committed to purchase;

 

(b)

if the oversubscription was more than five times higher than the quantity of Units offered to the public, then each Classified Investor shall be allotted 50% of the quantity that it committed to purchase.

 

If the quantity of the Debentures (Series F) remaining for distribution is insufficient for an allotment as stated above, then the quantity remaining for distribution shall be allotted to the Classified Investors according to the pro rata of each early commitment out of the total early commitments submitted at the same interest rate.

 

The allotment to Classified Investors shall be at the Uniform Interest Rate.

 

Orders from the Classified Investors shall be submitted within the scope of the tender and shall be deemed orders submitted by the public for the purpose of determining the interest rate, and this, subject to that stated above with regard to the allocation of the Debentures (Series E) in the event of an oversubscription. It is clarified that, if there is no oversubscription, then the orders from the Classified Investors within the scope of the tender shall be deemed orders submitted by the public for the purpose of distributing the Debentures (Series E) to the subscribers.

 

Early commitments received from Classified Investors:

 

Each of the Classified Investors specified hereunder committed, within the scope of an early commitment, to submit orders to purchase Units at a quantity not less than and at an interest rate that shall not exceed the following rates:

 

No.	Name of Classified Investor	Amount of units	Interest rate
1	Haifa University	1,000	1.90%
2	Haifa University	1,000	1.99%
3	IBI Investment House	2,000	2.10%
4	IDI Insurance Company – participating	601	2.16%
5	IDI Insurance Company – nostro	3,929	2.16%
6	Alumot Mutual Fund Management Ltd. for Xioma	8,000	2.15%
7	Altris Finance Ltd.	13,700	2.13%
8	Altshuler Shaham Mutual Fund Management Ltd.	40,810	2.15%
9	Altshuler Shaham Investment Portfolio Management Ltd.	1,305	2.15%
10	Amtarin 2 Limited Trust (*)	1,000	2.14%
11	Amtarin Limited Trust (*)	16,300	2.14%
12	Enigma Capital Markets Ltd. for portfolio management	800	1.90%
13	Best Invest – Yellin Lapidot	3,000	2.14%
14	Barak Capital Investments 2006 Ltd. (*)	7,000	2.09%
15	Hydroplan Engineering Ltd.	2,000	2.14%
16	Harel Pia Mutual Funds	22,570	2.08%
17	Vardan Investment House Ltd.	1,286	2.01%
18	Yellin Lapidot Provident Fund Management Ltd.	20,000	2.14%
19	Lehava Investment Portfolio Management Ltd.	20,000	1.99%
20	Medinol Ltd.	1,060	2.15%
21	More Alternative Investments	1,500	2.13%
22	More Alternative Investments	1,500	2.14%
23	Mahog Ltd.	2,000	2.14%
24	Meitav Dash Portfolio Management Ltd.	1,610	2.13%
25	Meitav Dash Mutual Funds Ltd. for Enigma	6,600	1.90%
26	Mifal Hapais (national lottery)	1,500	2.00%

 

27	Mishan Center Ltd.	1,000	2.15%
28	Sigma Mutual Funds Ltd.	15,541	2.16%
29	Inbar Derivatives Ltd.	13,000	2.09%
30	Fidelity Venture Capital Ltd.	1,555	2.09%
31	Fidelity Venture Capital Ltd.	1,555	2.13%
32	Proxima Investment Management Ltd. (*)	7,550	2.05%
33	Proxima Investment Management Ltd. (*)	13,128	2.15%
34	Moonbuzz Capital Fund Limited Partnership	14,600	2.05%
Total		250,000

 

*A Classified Investor that is a distributor in the issuance or affiliated with the distributor in the issuance.

 

The total amount of Units ordered by said investors- 44,978 Units ~18%.

 

The Classified Investors shall be entitled to an early commitment fee at the rate of 0.5% of the inclusive immediate consideration in respect of the Units for which the Classified Investors committed to submit orders.

 

On the Day of the Tender, a Classified Investor shall be permitted to decrease the interest rate compared to the interest rate that it had quoted in its aforesaid early commitment (at increments of 0.01%), by delivering written notice to the Issue Coordinator, which must be received by the Issue Coordinator by the Closing Time of the Subscription List.

 

The consideration that shall be paid by the Classified Investors shall be transferred to the Issue Coordinator through the TASE members, on the first trading day after the Day of the Tender, by 12:30 p.m., and shall be deposited by it in the Special Account, as defined above in section 2.11 of the Memorandum.

 

It is clarified that the Classified Investors shall be able to order Units at a quantity that exceeds that specified in their early commitments, however, any extra Units that shall be ordered shall not be deemed orders from Classified Investors for the purposes of this Shelf Offering Memorandum, but rather, for all intents and purposes, as orders submitted by the public.

 

5.	Additional terms of the Offered Securities-Debentures (Series F)

 

5.1

The payments on account of the interest of the Debentures (Series F) shall be paid to persons whose names shall be registered in the register of the Debentures (Series F) on June 19 in respect of payments paid on June 25 and on December 19 in respect of payments paid on December 25, that preceded the payment date of that payment (The "Effective Date of the Debentures (Series F) "), except for the last payment of the interest, to be paid on June 25, 2024, in respect of which the following shall apply: The final payment of the interest and payment of the principal shall be paid to persons whose names shall be registered in the register on the date of payment of the principal and the last interest payment and shall be made against delivery of the Debentures (Series F) certificates to the Company.

 

5.2

It is hereby clarified that a person who is not registered in the register for the Debentures (Series F) on the determining date of the Debentures (Series F), will not be entitled to interest payment in respect of the interest period that began before that date.

 

5.3

In any event where the principal and/or interest payment date is due on a day that is not a business day, the payment date will be postponed to the next business day without an additional payment, and the determining date for the purpose of determining interest eligibility will not change as a result.

 

5.4

For further details regarding principal and interest payments of the Debentures (Series F), see section 4 of the Terms and Conditions Overleaf of the Deed of Trust.

 

5.5

The Debentures (Series F) offered under this Shelf Offering Memorandum are not secured by any collateral whatsoever.

 

5.6

For details regarding arrears interest, see section 8 of the Terms and Conditions Overleaf of the Deed of Trust.

 

5.7

Immediate repayment and/or realization of collateral

 

The Trustee and the meeting of the holders of the Debentures (Series F) are entitled to demand the immediate repayment of the outstanding balance of the Debentures and/or to exercise collateral provided to secure the Company's obligations towards the Debenture holders (insofar as provided), in the cases described in section 11 of the Deed of Trust.

 

5.8

Early Redemption

 

5.8.1

Should the Stock Exchange decide to write off the listing from trade of the Debentures (Series F) that are in circulation because the value of the Debentures (Series F) is less than the amount determined in the Stock Exchange's articles and regulations regarding the writing off from trade of debentures, the Company will make an early redemption of the debentures. For details regarding early redemption at the initiative of the Stock Exchange, see section 10.1 of the Terms and Conditions Overleaf of the Deed of Trust.

 

5.8.2

In addition, the Company may, commencing from the date of listing the Debenture (Series F) for trade on the Stock Exchange, at its sole discretion, place the Debentures (Series F) for early redemption. For details regarding early redemption at the Company's initiative, see section 10.2 of the Terms and Conditions Overleaf of the Deed of Trust.

 

5.9

For details regarding the Company's liabilities to the Trustee and the holders of Debentures (Series F) in connection with financial covenants and changes in the interest rate due to failure to comply with financial covenants, see section 6 of the Deed of Trust and section 2 of Appendix A to the Deed of Trust.

 

6.	The Trustee for the Debentures

 

6.1

The trustee for the Debentures (Series F) is Hermetic Trust (1975) Ltd., with whom the Company entered into a Deed of Trust for the Debentures (Series F) dated July 18, 2017 (hereinafter: The "Deed of Trust")4. The full text of the Deed of Trust is attached as Appendix A to the Shelf Offering Memorandum. It is hereby clarified that in the event of cancellation of the issuance of the Debentures (Series F), for any reason whatsoever, the Deed of Trust shall be null and void.

 

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6.2

The Trustee has no material interest in the Company and the Company has no material interest in the Trustee.

 

7.	Discounting

 

7.1

The Debentures (Series F) issued pursuant to this Shelf Offering Memorandum are offered for the first time and will be issued without a discount for tax purposes.

 

7.2

In the event of expansion of a series (Series F), the Company shall act with respect to the discount rate in accordance with section 2.4 of the Deed of Trust.

 

8.	Tax implications

 

8.1

Capital gain from a sale of Debentures

 

Pursuant to section 91 of the Israel Income Tax Ordinance (New Version), 5721 – 1961 (hereinafter in this section: "the Ordinance"), a real capital gain from a sale of offered debentures that are not linked to the CPI⁵ by an individual resident of Israel, whose income from the sale of debentures does not constitute income from a "business" or from an "occupation" and who does not demand deduction of financing expenses, shall be liable to tax at a rate not to exceed 15% or 20%,  With respect to a "material shareholder"of the Company – i.e., a holder, whether directly or indirectly, whether alone or jointly with another party,⁶ of at least 10% of any of the means of control⁷ over the Company – on the date of sale of the debentures or on any date during the 12 months preceding the sale as stated, (hereinafter: "Material Shareholder") and will be viewed as real capital gains.

 

8.2

In addition, for an individual who demanded real interest expenses and linkage differentials for the debentures, the capital gain from the sale of the debentures will be taxed at a rate of 30% until the provisions and conditions for deducting real interest expenses are determined according to sections 101A (a) (9) and 101A Of the Ordinance.

 

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8.3

The reduced tax rate as aforesaid shall not apply to an individual whose income from the sale of the debentures is considered to be income from a "business" or an "occupation", in accordance with the provisions of section 2 (1) of the Ordinance. In this case, the individual will be charged a marginal tax rate in accordance with the provisions of section 121 of the Ordinance.

 

8.4

In addition to all of the above, an individual's income shall be subject to a surcharge of 3% on the part of the taxable income for 2017, in excess of NIS 640,000.

 

8.5

A body of persons shall be taxed for a real capital gain from a sale of debentures at the corporate tax rate prescribed in section 126(a) of the Ordinance (25%) (in 2017-24% and in 2018 and thereafter-23%).

 

8.6

Exempt mutual funds and provident funds and tax-exempt bodies pursuant to section 9(2) of the Ordinance are exempt from tax in respect of capital gains from a sale of debentures as stated, subject to the conditions prescribed in the said section. In the said section, the tax rates applicable to a taxable mutual fund's income from a sale of debentures shall be the tax rate that applies on the income of an individual when the income does not constitute income from a "business" or a "profession," unless otherwise expressly provided. If no special tax rate is set for the income, the income shall be taxed at the maximum rate prescribed in section 121 of the Ordinance.

 

8.7

As a rule, a foreign resident (individual or company, as defined in the Ordinance) are exempt from capital gains tax in a sale of debentures traded on the stock exchange in Israel, if the capital gain is not in his permanent enterprise in Israel, and in accordance with the conditions and restrictions specified in section 97(B2) of the Ordinance. That stated above shall not apply to a foreign company if residents of Israel are controlling shareholders8 therein or are beneficiaries of or are entitled to 25% or more of the income or profits of the group of foreign resident persons, whether directly or indirectly, as stated in section 68A Of the Ordinance. In the event that such exemption does not apply, exempt provisions of the tax treaty (if any) may apply between Israel and the foreign resident's country of residence, subject to the prior written consent of the Tax Authority.

 

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8.8

With respect to the deduction of tax at source from the real capital gain on the sale of the offered debentures, in accordance with the provisions of the Income Tax Regulations (Deduction from Consideration, Payment or Capital Gain on the Sale of a Security, Sale of a Mutual Fund Unit or a Future Transaction), 5763-2002 ("Capital Gains Deduction Regulations") a person paying a seller that is an individual proceeds from the sale of non-CPI-linked debentures must (as this term is defined in the Capital Gains Deduction Regulations) deduct 15% of the capital gain and at a corporate tax rate (in 2017 - 24% and from 2018 thereafter-23% ) from the real capital margin when the seller is a body of persons.This is subject to exemptions (or reduced rates) from deduction of tax at source and is subject to offsetting losses that may be deducted at source.

 

8.9

In addition, tax shall not be withheld at source for provident funds, mutual funds and other bodies exempt from deduction of tax at source according to the law, after having been furnished in advance of appropriate approvals by them.

 

8.10

If at the time of the sale the full tax at source is not deducted from the real capital gain, the provisions of section 91 (d) of the Ordinance and the provisions by virtue of it shall apply to reporting and payment of an advance payment in respect of such sale.

 

8.11

The provisions of the Capital Gains Deduction Regulations shall not apply to a debtor that is a financial institution paying a seller who is a foreign resident a consideration or other payment for an exempt capital gain if the foreign resident known to the financial institution submits to the financial institution within 14 days from the date of opening the account and once every three years, if it is in Israel, or his representative, a declaration on Form 2402 regarding his being a foreign resident and his entitlement to an exemption.

 

8.12

Insofar as the debentures offered under the Prospectus are delisted from trading on the TASE, the deduction at source rate deducted at the time of their sale (after the delisting) will be 30% of the consideration, until an approval of a tax assessor advising of another withholding tax rate (including exemption from withholding tax) has been provided.

 

8.13

In accordance with section 92 of the Ordinance, losses in the tax year originating from the sale of the debentures offered in the tax year and if they were capital gains would be taxable by their recipient will be offset against real capital gains and land appreciation deriving from the sale of any asset in Israel or abroad (excluding a mandatory inflationary amount that will be offset at a ratio of 1 to 3.5).

 

8.14

A capital loss as aforesaid,  will be permitted to be offset in the tax year in which it was created also against income from interest and dividends that were paid for the same security or for other securities during that same tax year, provided that the applicable tax rate for the interest or dividends from the other aforesaid security does not exceed the corporate tax rate prescribed in section 126(a)(A) of the Ordinance (in 2017 - 24% and in 2018 and thereafter - 23%) for a company and did not exceed the tax rate set out in sections 125B (1) and 125C (b) of the Ordinance regarding an individual (tax rate of 25%). Offsetting losses shall be carried out by way of offsetting the capital loss against capital gains or income from interest or dividends as aforesaid.

 

8.15

A loss from the sale of debentures that can not be offset, in whole or in part, in the said tax year, it will be possible to offset against real capital gain and land gain only as stated in section 92 (b) of the Ordinance in the following tax years, one after another, after the year in which the loss was created, as long as a report was filed with the tax assessor for the tax year in which the loss occurred.

 

8.16

In accordance with the Capital Gains Expenditure Deduction Regulations, it was determined that as part of the calculation of the capital gain for purposes of withholding tax from the sale of securities and futures transactions, the debtor (as this term is defined in the Capital Gains Deduction Regulations) will offset a capital loss arising from the sale of securities and futures transactions, in accordance with the provisions of section 92 of the Ordinance, as long as the following apply: the loss is created from the sale of securities that were under the management of the debtor and subject to the profit being created in that tax year in which the loss was created, before or after the date of creation of the loss.

 

8.17

The tax rate that shall apply to interest income from Debentures

 

In accordance with section 125C (c) of the Ordinance, an individual shall be liable at a tax rate of 15% on interest or discount fees originating in a debenture that is not linked to the CPI, in whole or in part, or not linked to the CPI until maturity.

 

8.18

In accordance with section 125C (d) of the Ordinance, the reduced tax rates as aforesaid shall not apply if, inter alia, one of the following conditions is fulfilled: (1) the interest is income from a "business" or an "occupation" under section 2 (1) of the Ordinance or is recorded in the accounting books of the individual or must be registered as aforesaid; (2) the individual demanded deduction of interest expenses and linkage differentials in respect of the debentures on which the interest is paid; (3) the individual is a material shareholder - as defined in section 88 of the Ordinance - in the company paying the interest; (4) the individual is an employee of a company paying the interest or providing services to it or selling its products or having other special relations with the company, unless it has been proved to the satisfaction of the assessment officer that the interest rate was determined in good faith and without being affected by the existence of such relations between the individual and the group of people; (5) there is another condition determined by the Minister of Finance with the approval of the Finance Committee of the Knesset. In these cases, marginal tax shall apply in accordance with the provisions of section 121 of the Ordinance. In addition, an appreciation tax of 3% will apply to the part of the individual's taxable income that exceeds NIS 640,000 in the year 2017.

 

8.19

The rate of tax applicable to interest income or discount fees of a body of persons resident in Israel that is not a body of persons, for which the provisions of section 9 (2) of the Ordinance apply in determination of his income, except for the purpose of section 3(h) regarding the accrued interest, originating in debentures traded on the TASE , is the corporate tax rate  in accordance with section 126 (a) of the Ordinance (in 2017 - 24% and in 2018 and thereafter - 23%).

 

8.20

Exempt mutual funds and provident funds and tax-exempt bodies pursuant to section 9(2) of the Ordinance are exempt from tax in respect of such interest income or discount fees, subject to the provisions of section 3 (h) of the Ordinance regarding interest or discount fees accrued during the period of the holding of another.

 

8.21

The tax rate applicable to the income or gains of an individual who does not have income from a business or occupation shall apply to the income of a mutual fund from interest or from discount fees, unless otherwise determined. If no special tax rate is set for the income, the income shall be taxed at the maximum rate prescribed in section 121 of the Ordinance.

 

8.22

Pursuant to the provisions of section 9 (15d) of the Ordinance9, a foreign resident is exempt from tax on income from interest, discount fees or linkage differentials due to a bond traded on a stock exchange in Israel issued by a body of persons resident in Israel provided that the income is not a permanent enterprise of a foreign resident in Israel. Subject to the provisions of the treaties for the avoidance of double taxation that were concluded between the State of Israel and the foreign resident's country of residence and subject to the approval of the Tax Authority, the exemption shall not apply in the following cases:

 

a)

a foreign resident is a material Shareholder in the body of persons issuing or,

 

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b)

a foreign resident is a relative as defined in paragraph (3) of the definition of a relative in section 88 of the Ordinance, of a body of persons issuing, or

 

c)

the foreign resident is an employee, a provider of services or a seller of products to a member of body of persons issuing or has special relations with him (unless it has been proved that the interest rate or discount rates were determined in good faith and without being affected by the existence of special relations).

 

It should be noted that the aforesaid exemption shall not apply to a foreign resident company held by residents of Israel at a rate exceeding 25%, in accordance with the provisions of section 68A of the Ordinance.

 

8.23

In the event that the aforesaid exemption does not apply, the tax rate applicable to a non-residents' interest income (an individual and a group of persons) originating in the debentures will be charged in accordance with the provisions of the Ordinance and the regulations promulgated thereunder,, as set out above, or in accordance with the provisions of treaties for the avoidance of double taxation between the State of Israel and the country of residence of a resident and obtaining appropriate prior approval from the Tax Authority.

 

8.24

Pursuant to Regulation 5(a) of the Israel Income Tax Regulations (Deduction from Interest, Dividend and Particular Profits), 5766 – 2005 ("Deduction from Interest and Dividend Regulations"), the tax rate that must be deducted at source on interest (as defined in the Deduction from Interest and Dividend Regulations)10 paid on debentures that are not linked to the CPI or which are partially linked to the rate of increase in the index, in whole or in part, or that are not linked to the index until redemption or until repayment, with respect to an individual that is not a Material Shareholder in the company paying the interest, meaning 15%. On the other hand, pursuant to Regulation 6 of the said Regulations, for an individual who is a Material Shareholder in a company paying the interest or an individual working at a company paying the interest or providing services to it or selling its products, the tax rate shall be at the maximum marginal tax rate in accordance with section 121 of the Ordinance.  A tax shall be deducted in respect of a body of persons (an Israeli resident and a foreign resident) at the corporate tax rate prescribed in section 126(A) of the Ordinance (in the year 2017- 24%, in the year 2018 and thereafter – 23%).

 

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8.25

Notwithstanding the foregoing, the tax rate at source for a foreign resident (an individual and a body of persons) may be reduced in accordance with the treaties for the prevention of double taxation between the State of Israel and the foreign resident's country of residence and subject to prior presentation of a valid approval from the Tax Authority.

 

It should be noted that for interest paid to a foreign resident to whom the provisions of section 9 (15d) of the Ordinance apply, no tax shall be withheld at source.

 

8.26

Interest payments to provident funds, mutual funds and other entities listed in the Schedule to the Deduction from Interest and Dividend Regulations are exempt from withholding tax, after the provision of appropriate advance approvals.

 

The above is subject to exemptions (or reduced rates) from deduction of tax at source and is subject to set-off of losses that may be deducted at source.

 

8.27

The method of calculating the discount for purposes of withholding tax in respect of debentures11

 

In accordance with the provisions of section 2 (4) of the Ordinance and section 125C of the Ordinance, a discount¹² in respect of a debenture is treated as interest that is taxable and deducted at source as aforesaid. The deduction of withholding tax in respect of the discount fee¹² shall be on the redemption dates of the debenture principal.

 

In general, in the absence of any other directive from the Tax Authority, the discount rate will be determined according to the difference between the liability value of the debentures and the consideration attributed to the debenture insofar as this difference is positive. To the extent that they will be issued only in bond units, the discount rate shall be specified in the offering report or in the report on the results of the issue as the case may be.

 

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Withholding tax from interest (including discount fees ¹²) as aforesaid and transfer thereof to the Tax Authority will be carried out by TASE members and not by the Company. The Company shall transfer to the TASE members (through TASE) the gross amount of the interest as well as the information it possesses in relation to the Holders and the security by virtue of which such interest is paid.

 

In Regulation 4 of the Income Tax Regulations (Calculation of Capital Gain on the Sale of a Security Traded on a Stock Exchange, a State Loan or a Mutual Fund Unit), 5763-2002, it was determined that in the redemption of debentures traded on the stock exchange in which discount fees are also paid, consideration plus the discount fees will be deemed to be the proceeds of the redemption if all of the above have been fulfilled: (1) The capital gain on the sale of the debenture is not exempt from tax; (2) the redemption date creates a capital loss; and (3) the redemption is not in the hands of the controlling shareholder or a holder of the debenture from the date allotted or issued, all of which up to the amount of the capital loss. The discount fees that are considered as consideration in accordance with these provisions shall not be considered as income under section 2 (4) of the Ordinance.

 

The TASE members will deduct from the original interest payments paid by them to the Debenture holders the tax payments that must be deducted at source, except for entities exempt from withholding tax as stated in accordance with the law. On the repayment dates of the principal of the Debentures, the TASE members shall deduct tax at source in respect of the discount fees, if any, as detailed above and below.

 

8.28

Issuance of additional debentures as part of the expansion of the series

 

In the event that the Company will issue additional debentures in the series in the framework of the expansion of the series at a discount rate that is different from the discount rate for that series (including the absence of a discount, if relevant), the Company will apply to the Tax Authority on the matter, before the expanstion, in order to obtain its approval that with respect to the discount fees of the debentures, a uniform discount rate  will be set for the debentures according to a formula that weighs the various discount rates in that series, insofar as there will be (hereinafter in this section: The "Weighted Discount Rate"). In the event that such approval is received, the Company will consider the weighted discount rate for all the debentures in accordance with that approval and before the expansion of the series, prior to the expansion of the series, the Company will submit an immediate report informing the weighted discount rate for each series and will deduct tax on the redemption dates of the debentures of the said series according to the said Weighted Discount Rate  and in accordance with the provisions of the law.

 

In such a case, all other provisions of the law relating to the taxation of discount fees shall apply. If the aforesaid approval is not received from the Tax Authority, the Company shall submit an immediate report prior to the expansion of the series, stating that such approval has not been received, and that the uniform discount rate shall be the highest discount rate created for the series and all other statutory provisions relating to the taxation of discount fees shall apply. The TASE members shall withhold tax at source upon redemption of the series, in accordance with the rate to be reported as aforesaid.

 

Therefore, there may be cases in which the Company deducts tax at source in respect of discount fees at a rate higher than the discount fees determined for the holder of the debentures from the series prior to the increase in the series (hereinafter: The "Excess Discount Fees"), regardless of whether approval was received from the Tax Authority to determine a uniform discount rate for that series or not. A taxpayer who held the debentures from the said series prior to the expansion of the series until the redemption of the debentures held by him, shall be entitled to submit a report to the Tax Authority and to receive a tax refund in the amount of the tax deducted from the Excess Discount Fees, to the extent that he is entitled to such refund by law.

 

 

9.	Refraining from arrangements

 

9.1

The Company and the directors, by signing the Shelf Offering Memorandum, are undertaking to refrain from making any arrangements that are not specified in the Shelf Prospectus and in the Shelf Offering Memorandum in relation to the offering of the Securities that shall be offered pursuant to the Shelf Offering Memorandum, the distribution and dispersion thereof among the public, and are undertaking to refrain from granting a right to purchasers of the Securities that shall be offered pursuant to the Shelf Offering Memorandum to sell the Securities that they purchased, and all, beyond that specified in the Shelf Prospectus and/or in the Shelf Offering Memorandum.

 

9.2

The Company and the directors, by signing the Shelf Offering Memorandum, are undertaking to notify the Israel Securities Authority about any arrangement known to them with a third party in relation to the registration and offering of the Securities that shall be offered pursuant to the Shelf Offering Memorandum, the distribution and dispersion thereof among the public, that contradicts the undertaking as stated above in section 9.1.

 

9.3

The Company and the directors, by signing the Shelf Offering Memorandum, are undertaking to refrain from engaging with any third party in relation to the registration and offering of the Securities that shall be offered pursuant to the Shelf Offering Memorandum, the distribution and dispersion thereof among the public, who, to the best of their knowledge, made arrangements contrary to that stated above in section 9.1.

 

10.	Rating of the Debentures

 

10.1

On July 2, 2017 S & P Global Ratings Maalot Ltd. (hereinafter: "Maalot") announced a rating of ilA+ for the Debentures (Series F) in an amount of up to 300 million NIS par value, which will be issued by the Company. For details, see the immediate report of the Company from that date, reference no.: 2017-15-068673, the contents of which are hereby brought by way of reference.

 

10.2

Maalot's agreement to include the rating report in the Shelf Offering Memorandum, including by way of reference, is attached as Appendix B to the Shelf Offering Memorandum.

 

10.3

For details regarding the adjustment in the interest rate of the Debentures (Series F), as a result of a change in the rating and/or non-compliance with the financial covenants, see Appendix A to the Deed of Trust.

 

11.	Permits and confirmations

 

11.1

The TASE issued its approval to list the Debentures (Series F) being offered to the public pursuant to the Shelf Offering Memorandum. The TASE approval for listing for trading is attached as Appendix C to the Shelf Offering Memorandum.

 

11.2

The TASE's said approval is not to be construed as a confirmation of the details presented in the Shelf Offering Memorandum, or of the reliability or completeness thereof, and it should not be construed as expressing any opinion about the Company or about the quality of the Securities being offered in the Shelf Offering Report or about the price at which they are being offered.

 

11.3

The listing of the Debentures (Series F) offered under this Shelf Offering Memorandum for trading on the TASE is subject to fulfillment of the following conditions:

 

11.3.1

The value of the public's holdings in the Debentures (Series F) will not be less than NIS 36 million.

 

11.3.2

The minimum distribution required in the series of Debentures (Series F) is at least 35 holders, each holding a minimum holding value of NIS 200,000.

 

 For the purposes of this section, "Holder" - one Holder whose holding value exceeds the minimum holding value required under this section or holds together with others whose joint holding value exceeds the minimum holding value of such Holder.

 

11.3.3.

The Debentures (Series F) are rated by Maalot at ilA+. Therefore, the Company is exempt from the equity requirements prescribed in the TASE guidelines.

 

11.3.4

If it transpires that the TASE's early requirements for registration for trading on the TASE as stated in section 11.3 above have not been fulfilled with regard to the offered securities, the issue will be canceled and the securities offered will not be allocated and not listed for trade on the TASE.   The Company will be entitled to issue the Debentures (Series F), the issuance of which was canceled as stated, according to the following shelf offering reports, to the extent they are published, subject to the provisions of any law and the directives of the Stock Exchange.

 

11.3.5

The trading of the Offered Securities pursuant to This Offering Report2shall begin shortly after they are listed for trading.

 

12.	Payment of a fee

 

Pursuant to the provisions of Regulation 4.A of the Israel Securities Regulations (Application Fee for the Granting of a Permit to Publish a Prospectus), 5755 – 1995, the Company shall pay the Israel Securities Authority the additional fee for the Securities being offered within the scope of the Shelf Offering Memorandum.

 

13.	Proceeds of the issue

 

13.1

The immediate proceeds that the Company anticipates from the issue pursuant to the Shelf Offering Memorandum, assuming that all of the Debentures being offered in the Shelf Offering Memorandum shall be purchased, after deducting the expenses involved in the issue pursuant to the Shelf Offering Memorandum, shall be as specified hereunder:

 

The anticipated immediate proceeds (gross)		~ NIS 300 million
Less early commitment fees and distribution fees13		~ NIS 1.9 million
Less other expenses (estimated)		~ NIS 0.7 million
Total anticipated proceeds, (net)		~ NIS 297.4 million

 

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13.2

Since the issue pursuant to this Shelf Offering Memorandum is not secured by underwriting, there is no assurance that all of the Debentures (Series F) being offered shall be purchased.

 

13.3

Regarding the designated use of the proceeds of the issue, see section 16.5 hereunder.

 

13.4

Until the issue proceeds are used, the Company shall deposit and invest these monies as it shall deem fit, provided that every such investment shall be in solid channels.

 

In this section, "solid channels" – including, but not limited to, an interest-bearing cash deposit, deposit in foreign currency, bonds assigned a rating of at least "AA," etc. For the purpose of that stated above, an investment in shares or in ETFs, when their underlying asset is shares or share indices or Maof options, or a purchasing or writing of derivative positions, shall not be deemed an investment in solid channels.

 

13.5

No minimum sum for achievement was defined in this issue.

 

14.	Updates to the Shelf Prospectus

 

In accordance with section 4 of the Shelf Offering Regulations, all reports submitted by the Company subsequent to publication of the Shelf Prospectus are included in this Shelf Offering Memorandum by way of reference. The full text of the Company's reports can be found on the distribution website of the Israel Securities Authority at www.magna.isa.gov.il and on the TASE's website at maya.tase.co.il.

 

15.	Consent for inclusion

 

A letter of consent of the Company's independent auditor is attached to this Shelf Offering Memorandum, which includes its consent that its opinion of the Company's financial statements shall be included, by way of referral, in this Shelf Offering Memorandum, all in the version of the attached consent letter and subject thereto.

 

16.	Information about the Offering and the Company

 

16.1

Summary Terms of the Offer

 

Issuer	Partner Communications Company Ltd. (the "Company")
Securities Offered	Up to NIS 300,000,000 principal amount of registered Series F Debentures (the "Debentures" or "Series F Debentures").
Denomination	The Debentures will be issued in units, each in the principal amount of NIS 1,000 (each a "Unit")
Offering Price	NIS 1,000 per Unit.
Principal Payment Dates	Principal payable in 5 equal annual instalments on June 25 of each of the years 2020 through 2024.
Interest Rate	To be determined by auction process, and in any event not more than 2.16% per year, subject to some adjustments in the event of changes of the rating of the debentures and breach of financial covenants.
Maturity	June 25, 2024.
Linkage	None
Preliminary Ranking	ilA+
Forced Redemption	The Debentures will be subject to forced redemption by the company under certain conditions set forth in Section 10.2 of the Indenture between the Company and the Trustee dated as of July 18, 2017
Listing	Application will be made to list the Debentures for trading on the Tel Aviv Stock Exchange (the "TASE").
Use of Proceeds	To increase the Company's liquidity to enable it, together with other sources of financing, to meet the Company's scheduled debt repayments.
Governing Law	Israeli law and courts.
Trustee	Hermetic Trust (1975) Ltd.

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), AND WILL NOT BE OFFERED OR SOLD IN THE UNITED STATES.

 

Each purchaser of the Debentures offered pursuant to this shelf offering document shall be deemed to have acknowledged, represented and agreed that (i) the Debentures offered hereby have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state of the United States; (ii) it is not located in the United States and that it is not purchasing the Debentures on behalf of any person located in the United States; and (iii) it was not in the United States at the time that it submitted an application to purchase or when it purchased the Debentures.

 

16.2

Risk Factors

 

Investing in our Company's securities involves a high degree of risk.  See "Risk Factors" in section 3.5 of the shelf prospectus filed with the Israel Securities Authority ("ISA") on June 3, 2015, which validation was extended until June 3, 2018 (the "Shelf Prospectus") and in Item 3.D of our annual report on Form 20-F for the year ended December 31, 2016, filed with the U.S. Securities and Exchange Commission ("SEC") and the ISA on March 30, 2017 (the "2016 20-F").

 

We believe that the occurrence of any one or some combination of the following factors could have a material adverse effect on shares offered by this shelf offering report.

 

Risks Related to the Debentures offered by this Shelf Offering Report

 

We believe that the occurrence of any one or some combination of the following factors could have a material adverse effect on Debentures offered by this Shelf Offering Report.

 

Our Debentures will be unsecured and will be effectively subordinated to our existing and future secured indebtedness.

 

Although our Series F Debentures include undertakings not to pledge our assets, subject to certain conditions described in the Shelf Prospectus, our debentures will be unsecured and will be effectively subordinated to any existing and future secured indebtedness we may have. Therefore, the rights of our creditors, including the holders of the Debentures, to participate in our assets upon liquidation or reorganization will be subject to the prior claims of our secured creditors.

 

We may not be able to generate sufficient cash flow to make payments under the Debentures.

 

Our ability to make payments on our indebtedness (as discussed also under the risk factor entitled "Our level of indebtedness could adversely affect our business, profits and liquidity. Furthermore, difficulties in generating sustainable cash flow may impair our ability to repay our debt and reduce the level of indebtedness" in Item 3.D of our 2016 20-F), including the Debentures being offered by this shelf offering report, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

 

In case any of the factors beyond of our control will change, we cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Since 2012, our results of operations have been materially adversely affected by regulatory changes, which have also facilitated the entry of additional competitors, dramatically increased competition (as a result of which our churn rate in the cellular field reached 40% in 2016) and continued price erosion, resulting in a decrease in our Adjusted EBITDA for 2014, 2015 and 2016 by 1.5%, 20.0% and 5%, respectively, in comparison to the previous year. Competition resulting from the full service offers by telecommunications groups and additional entrants into the mobile telecommunications market, as well as other actual and potential changes in the competitive environment and communications technologies, could adversely affect our business and results of operations. Additional significant decreases in operating results would likely increase the need for alternative sources of liquidity. If we are unable to generate sufficient cash flow to make payments on the Debentures or our other indebtedness, we will have to pursue one or more alternatives, such as reducing our operating expenses, reducing or delaying capital expenditures, refinancing the Debentures or such other indebtedness, or raising equity. We cannot assure you that any of these alternatives could be accomplished on satisfactory terms or that they would yield sufficient funds to repay the Debentures and our other indebtedness.

 

Although we expect to list the Debentures on the TASE, there are restrictions on your ability to transfer or resell the Debentures in the United States without registration under applicable U.S. federal and state securities laws.

 

The Debentures have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state or any other jurisdiction in the United States and, unless so registered, may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and the applicable securities laws of any state or any other jurisdiction. It is the obligation of holders of the Debentures to ensure that their offers and sales of the Debentures within the United States and other countries comply with applicable securities laws.

 

A downgrade, suspension or withdrawal of the rating assigned by a rating agency to the Debentures could cause the liquidity or market value of the Debentures to decline significantly.

 

Maalot S&P Global Ratings Ltd., an Israeli rating agency, assigned a preliminary rating of ilA+ for this debenture offering in an amount of up to NIS 300 million. We cannot assure you that such rating will remain for any given period of time or that the rating will not be revised, lowered or withdrawn entirely by Maalot S&P Global Ratings or any other rating agency if in such rating agency's judgment future circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant, and a security rating is not a recommendation to buy, sell or hold securities. In July 2015, the rating of our debentures was downgraded. For more information, see the risk factor entitled "Our level of indebtedness could adversely affect our business, profits and liquidity. Furthermore, difficulties in generating sustainable cash flow may impair our ability to repay our debt and reduce the level of indebtedness" in Item 3.D of our 2016 20-F and "Item 5. Operating and Financial Review and Prospects – 5B. Liquidity and Capital Resources" in our 2016 20-F.

 

16.3

Recent Developments

 

In furtherance to the Company's disclosures in the 2016 20-F regarding the MoC's policy and actions regarding the fixed-line telecommunications sector, in May 2017, the acting Minister of Communications decided that Bezeq – The Israel Telecommunication Corp., Ltd. ("Bezeq") would be required to offer its telephony service to other operators in a resale format, instead of the full wholesale telephony service. The Minister's decision set the prices and format for Bezeq's resale telephony product. The price for the resale telephony is suggested to be set substantially higher than the prices set in 2014 for the full wholesale telephony product. According to the Minister's decision, during an interim period of 14 months, Bezeq would be required to provide its telephony service in a resale format (as a trial period) and will not be obliged to offer a full wholesale telephony service. This interim period may be extended so that the resale product may permanently replace the full wholesale product. The Minister allowed interested parties to present their positions regarding the prices set for the resale format. Any possible change to the price (that may result from the hearing) would be applied retroactively. The Company is reviewing the methodology used by the Ministry of Communications in setting the price of the resale telephony product and intends to submit to the Ministry of Communications its written position on the subject. If the price of the resale telephony service is set at a level which does not leave a reasonable margin for competition and market entry, this may have an adverse effect on the Company.

 

16.3.1

Indebtedness and Capitalization

 

The following table sets forth our capitalization and indebtedness (i) as of March 31, 2017 and (ii)  as adjusted to reflect:

 

·

the issuance of 10,178,221 new ordinary shares, nominal value NIS 0.01 per share, in the capital of the Company ("Shares"), pursuant to the shelf offering report of the Company dated June 15, 2017;

 

·

the offering and sale of the Debentures offered hereby; and

 

·

the prepayment of certain of the Company's indebtedness.

 

The information in this table should be read in conjunction with and is qualified by reference to the consolidated financial statements and notes thereto and other financial information incorporated by reference into this shelf offering report.

 

		in NIS millions (unaudited)
		As of March 31, 2017				Adjustments after March 31, 2017
						Shares issued June15, 2017				Loans prepaid (1)				This offering of Series F Debentures				As Adjusted
Cash and cash equivalents			1,017				189				(628	)			297				875
Short term deposit			250								(250	)							0
Debt
Notes payable series C, less deferred costs, including current maturities			423																423
Notes payable series D, less deferred costs, including current maturities			543																543
Notes payable series E, less deferred costs, including current maturities			121																121
Notes payable series F, less deferred costs, including current maturities			0												297				297
Borrowings from banks and others			1,595								(878	)							717
Total debt			2,682								(878	)			297				2,101
Equity:
Share Capital			2																2
Capital surplus			1,034																1,223
Accumulated retained earnings			413				189												413
Treasury shares			(283	)															(283	)
Total shareholders' equity			1,166				189												1,355
Total Capitalization and Indebtedness			2,581																2,581

 

(1) On June 21 and 22, 2017 the Company prepaid loans in principal amount of NIS 500 million (Borrowings C, D, E and F).

 

     On June 29, 2017 the Company prepaid loans in principal amount of NIS 200 million (Borrowings H and G).

 

     On July 14, 2017 the Company prepaid loans in principal amount of NIS 175 million (Borrowings I and J) (excludes repayment of such loans in accordance with their original schedule in a principal amount of NIS 3 million).

 

16.4

Ratio of Earnings to Fixed Charges

 

Our ratio of earnings to fixed charges for the periods indicated below was as follows:

 

	2012	2013	2014	2015	2016	Three Months Ended March 31, 2017
Ratio of earnings to fixed charges	3.14	1.73	2.10	0.84	1.48	2.62

 

The ratio resulting from the application of the proceeds of the debt offering is not provided because it is less than 10%.

 

Our ratio of earnings to fixed charges is calculated by dividing (i) income (loss) from ordinary activities before income taxes plus fixed charges by (ii) fixed charges. Fixed charges consist of interest expensed and capitalized, amortization of issuance costs relating to our notes payable, and one third of our operating leases, principally for antenna sites (being the portion deemed to represent the interest factor).

 

16.5

Use of Proceeds

 

The net proceeds from the offering, after deduction of the arranger's fees and other expenses and commissions of the offering, will be approximately NIS  297 million.

 

We intend to use the net proceeds from the offering to increase the Company's liquidity to enable it, together with other sources of financing, to meet the Company's scheduled debt repayments.

 

16.6

Expenses of the Offering

 

The aggregate amount that we will pay for arrangement fees and our other commissions and expenses in connection with this offering is approximately NIS 3 million.

 

16.7

Incorporation of Certain Information by Reference

 

We are allowed to incorporate by reference into this shelf offering report the information that we file with the SEC and the ISA, which means that we can disclose important information to you by referring to those filings.  The information incorporated by reference is considered to be part of this offering report.  We are incorporating by reference in this shelf offering report the documents listed below, the documents listed in section 3.13 of the Shelf Prospectus and any future filings we may make with the SEC and ISA on Form 20-F or on Form 6-K (to the extent that such Form 6-K indicates that it is intended to be incorporated by reference herein) prior to the termination of this offering:

 

·

Form 20-F for the year ended December 31, 2016, filed with the SEC [and the ISA] on March 30, 2017;

 

·

Form 6-K filed with the SEC on March 30, 2017 (relating to fourth quarter and annual 2016 results);

 

·

Form 6-K filed with the SEC and with the ISA on April 3, 2017 (relating to the interest rate for the series D notes);

 

·

Form 6-K filed with the ISA on April 9, 2017 and with the SEC on April 10, 2017 (relating to the Company receiving a lawsuit and a motion for the recognition of this lawsuit as a class action);

 

·

Form 6-K filed with the SEC and with the ISA on May 8, 2017 (relating to Company's announcement of the release of first quarter 2017 results);

 

·

Form 6-K filed with the SEC and with the ISA on May 22, 2017 (relating to the Company's first quarter 2017 results);

 

·

Form 6-K filed with the SEC and with the ISA on May 22, 2017 (relating to the extension of the 2015 Shelf Prospectus); and

 

·

Form 6-K filed with the ISA on May 29, 2017 and with the SEC on May 30, 2017 (relating to the Netflix and Partner collaborating in Israel).

 

·

Form 6-K filed with the ISA on June 11, 2017 and with the SEC on June 12, 2017 (relating to the announcement of possible share offering in Israel).

 

·

Form 6-K filed with the ISA and with the SEC on June 15, 2017 (relating to shelf offering memorandum).

 

·

Form 6-K filed with the ISA on June 18, 2017 and with the SEC on June 19, 2017 (relating to issuance results in accordance with a shelf offering report).

 

·

Form 6-K filed with the ISA on June 25, 2017 and with the SEC on June 26, 2017, 2017 (relating to early repayments of loans).

 

·

Form 6-K filed with the ISA and with the SEC on June 27, 2017 (relating to the launch of Partner TV services).

 

·

Form 6-K filed with the ISA on July 2, 2017 and with the SEC on July 3, 2017 (relating to the consideration of bond issuance in Israel).

 

·

Form 6-K filed with the ISA and with the SEC on July 4, 2017 (relating to interest rate for the series D notes for the period commencing on July 1, 2017 and ending on September 30, 2017).

 

·

Form 6-K filed with the ISA on July 16, 2017 (relating to consideration of bond issuance in Israel).

 

As you read the above documents, you may find inconsistencies in information from one document to another.  If you find inconsistencies between the documents and this shelf offering report, you should rely on the statements made in the most recent document.

 

We will provide to each person, including any beneficial owner, to whom this shelf offering report is delivered, a copy of these filings, at no cost, upon written or oral request to us at: 8 Amal Street, Afek Industrial Park, Rosh Ha'ayin 48103, Israel, Attn.: Corporate Secretary, telephone number: 972-54-7814-888.  Copies of these filings may also be accessed on the SEC's website at www.sec.gov, the ISA's website at www.magna.isa.gov.il and our website at www.partner.co.il.  Except for such filings, information contained on such websites is not part of this shelf offering report.

 

16.8

Legal Matters

 

Certain legal matters with respect to the offering of the Shares are being passed upon for us by Agmon & Co., Rosenberg, Hacohen & Co. of Tel Aviv, Israel and by Shearman & Sterling (London) LLP of London, United Kingdom.

 

17.	The legal opinion:

 

The Company received the following opinion:

July 18, 2017

 

Partner Communications Company Ltd.

8 Amal Street

Afek Industrial Park

Dear Mr./Ms.,

 

Re: Partner Communications Company Ltd. (hereinafter: "the Company") –

 

With reference to the Company's Shelf Prospectus dated June 3, 2015 (hereinafter: "the Shelf Prospectus") and to the Shelf Offering Memorandum that is being published by virtue thereof, we hereby issue our opinion as follows:

 

1.	In our opinion, the rights attached to the securities being offered pursuant to the Shelf Offering Memorandum have been correctly described in the Shelf Offering Memorandum.

 

2.	In our opinion, the Company has the authority to issue the Securities being offered in the Shelf Offering Memorandum in the manner described in the Shelf Offering Memorandum.

 

3.	In our opinion, the Company's directors have been duly appointed and their names are included in the Shelf Offering Memorandum.

 

We hereby agree to the inclusion of this opinion in the Shelf Offering Memorandum.

 

Sincerely,

 

Shirel Guttman-Amira, Adv.    Iris Cibulski-Havilio, Adv.    Evyatar Sadeh, Adv.

 

Agmon & Co. Rosenberg Hacohen & Co.

18.	Letter of consent of the Company's independent auditor

 

July 18 2017

The Board of Directors of Partner Communications Ltd.

Dear Mr./Ms.,

We are agreeing to the inclusion, by way of referral, in the Shelf Offering Memorandum (hereinafter – "the Offering Memorandum") of Partner Communications Company Ltd. (hereinafter – "the Company"), of the auditors' opinion that we signed on March 29, 2017, which relates to the Company's consolidated financial statements and to the effectiveness of internal control components on the Company's financial reporting as on December 31, 2016, which were submitted by the Company to the United States Securities and Exchange Commission and to the Israel Securities Authority within the scope of the F-20 Report for 2016, on March 30, 2017, as well as to the inclusion of our name under the title "experts" in the Offering Memorandum, as the term "expert" is defined in the Securities Act of 1933.

This letter is being issued at the request of the Company and is designated solely for inclusion in the Company's Offering Memorandum, to be filed with the ISA in Israel and which is planned to be published in July 2017. Furthermore, since the securities being offered within the scope of the Offering Memorandum were not and shall not be listed pursuant to the Securities Act of 1933, we did not submit this letter of consent under the Securities Act of 1933.

Sincerely,

Kesselman & Kesselman

Accountants

PwC Israel

 

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, POB 50005, Tel-Aviv 6150001

Telephone: +972-3-7954555, fax: +972-3-7954556, www.pwc.com/il

Kesselman & Kesselman is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity

 

 

The Company:
	Partner Communications Company Ltd.
The Directors:
	Adam Chesnoff
	Elon Shalev
	Michael Anghel
	Barry Ben-Zeev
	Fred Gluckman
	Barak Pridor
	Osnat Ronen
	Yoav Rubinstein
	Arieh Saban
	Arie (Arik) Steinberg
	Ori Yaron
	Yehuda Saban

 

It should be clarified that this Deed of Trust is only a draft. The wording of the  Deed of Trust may change substantially until the date of the actual issuance of the Company's series of debentures (Series F), if and to the extent that it is issued. The binding version of the Deed of Trust for the  debentures (Series F), if and to the extent they will be issued, will be the version that will be attached to the Shelf Offering Report (if and to the extent that it is published by the Company pursuant to the Shelf Prospectus) and its entry into effect will only be subject to the issuance of the Debentures under it.

1.4.1	"This Deed" or "the Deed of Trust"	This Deed of Trust, including the appendices and addenda attached thereto and constituting an integral part thereof;
1.4.2	"The Prospectus" or "the Shelf Prospectus"	As defined in the recitals above;

1.4.3	"Shelf Offering Memorandum" or "Offering Memorandum"	The memorandum under which the Series F Bonds are being offered to the public pursuant to the provisions of section 23.A,(f) of the Securities Law, 5728 – 1968, which shall furnish all of the specific details of that offering, pursuant to the provisions of any law and pursuant to the TASE regulations and directives, as they shall be at that time;
1.4.4	"The Trustee"	The Trustee referred to in the recitals of This Deed and/or any party that shall serve from time to time as the Trustee of the Bondholders pursuant to This Deed;
1.4.5	"The Tender"	The tender in which context the Bonds (Series F) will be offered to the public;
1.4.6	"The Register"	The Register of the Bondholders as stated in clause 29 of This Deed;
1.4.7	"The Bondholders" and/or "the Holders"	As the terms "holder" and "bondholder" are defined in the Securities Law;
1.4.8	"The Bond Certificate"	Bond certificate, the version of which is attached as the First Addendum to This Deed;
1.4.9	"The Law" or "the Securities Law"	Securities Law, 5728 – 1968 and the Securities Regulations, as they shall be from time to time;
1.4.10	"The Companies Law"	The Companies Law, 5759 – 1999 and the Companies Regulations, as they shall be from time to time;
1.4.11	"Principal"	The total par value of the Series F Bonds;
1.4.12	"Trading Day"	Any day on which transactions are transacted on the TASE;
1.4.13	"Business Day" or "Banking Business Day"	Any day on which most of the banks in Israel are open for business;
1.4.14	"The TASE"	The Tel-Aviv Stock Exchange Ltd.;

1.4.15	"The Nominee Company"	Mizrahi Tefahot Nominee Company Ltd. or a nominee company that shall subrogate for it at the Company's sole discretion and subject to any law, provided that all of the Company's securities are registered with that nominee company;
1.4.16	"Special Resolution"	Resolution passed during a meeting of the Series F Bondholders, attended by at least two Holders of at least twenty-five percent (25%) of the balance of the par value of the Series F Bonds in circulation on the record date for the meeting, either personally or by their proxies, or during an adjourned meeting of this meeting, attended by Holders of at least twenty percent (20%) of the said balance, either in person or by their proxies, and which was passed (whether during the original meeting or during the adjourned meeting) by a majority of at least sixty six percent (66%) of all votes of those participating in the vote, excluding abstentions.
1.4.17	"Ordinary Resolution"	Resolution passed during a meeting of the Bondholders, which convened pursuant to section 35.L.13 and 35.L.14(a) of the Law, and which was passed (whether during the original meeting or during the adjourned meeting) by a majority of at least fifty percent (50%) of the votes of those participating in the vote, excluding abstentions.
1.4.18	"Rating Company"	A rating company approved by the Capital Market Commissioner of the Ministry of Finance.
1.4.19	"Related Holder"	As this term is defined in section 28 of the Second Addendum to This Deed.

THIS NOTE CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS AND THE ISSUER HAS NOT BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE 1940 ACT). NEITHER THIS NOTE CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND UNDER CIRCUMSTANCES WHICH DO NOT REQUIRE THE ISSUER TO REGISTER UNDER THE 1940 ACT.

	"The Bondholders" and/or "the Owners of the Bonds" and/or "Holders" and/or "Entitled Parties"	–	As this term is defined in the Securities Law.
	"Registered Holder"	–	Any party that has Bonds registered to its credit in the Register of the Bondholders.
	"Unregistered Holder"	–	Any party that has Bonds registered to its credit with a TASE member and those Bonds are included among the bonds registered in the Register of the Bondholders under the name of the Nominee Company.
	"The Tender"	–	The tender in which context the Bonds (Series F) will be offered to the public;
	"The TASE Clearing House"	–	The Clearing House of the Tel-Aviv Stock Exchange Ltd.