Israel Salt Industries Ltd. (TASE:SALT), controlled by the Dankner family, today announced that it had reached an agreement with a third party to extend it a NIS 9 million loan in exchange for an option to buy 50% of ACE Marketing Chains (ACE Israel) in the event that the third party’s bid wins. The third party is reportedly the Gaon-Zbeda group, since Markstone Capital Partners Group LLC has sufficient equity following its recent financing round.
Salt Industries’ option will be valid for six months from the date of the agreement, or from when the third party establishes a new company to buy all of ACE Israel’s controlling shareholder.
Markstone and the Gaon-Zbeda group are currently bidding for ACE Israel. Shlomo Zbeda jointly owned 25% of ACE Israel with Gad Zeevi, and therefore claims that the Gaon-Zbeda group has first refusal rights.
Zeevi Group receiver Adv. Lipa Meir recently asked the courts to decide which company will buy ACE Israel, after Markstone claimed that Zbeda had no right to transfer first refusal rights to a third party, or to trade in these rights for personal profit, amounting to about NIS 2 million. The Gaon group previously offered $30 million for ACE Israel, and Markstone matched the bid.
ACE Israel today announced that it was extending its contract with ACE Hardware Corp., a retailer-owned cooperative, to ten years, compared with five years for the two previous contracts. ACE Israel CEO Yaki Vadmani said that under the contract, as part of the agreement, Ace Israel would continue to be full members of the Ace cooperative, including receiving a year-end dividend on its purchases, and had agreed to source an increasing amount of products through Ace Hardware. He said ACE Israel was one of the first foreign branches of ACE Hardware to join this arrangement.
As a result of the contract with ACE Hardware, ACE Israel will benefit from shares in the cooperative at a price of $10,000 each. The share grants each member a dividend proportional to the member’s stake in ACE Hardware, which functions as a buyers’ organization. The cooperative distributed $100 million in dividends in 2004. On the basis of ACE Israel’s current purchases, it can expect to receive hundreds of thousands of dollars in dividends over the next three years.
In addition, for the first time, ACE Israel will have a franchise to locally manufacture products that meet ACE Hardware’s specifications. ACE Hardware representatives will test products made by ACE Israel in accordance with Israeli specifications.
Published by Globes [online], Israel business news - www.globes.co.il - on October 19, 2005