York Capital Management and Bank Leumi (TASE: LUMI) have agreed to postpone the closing of the sale of Psagot Ofek Investment House Ltd. by a few days. Sources inform ''Globes'' that, belying earlier reports, York Capital opening demand was a 10% reduction, or NIS 135 million, in the price for Psagot Ofek, but that it is now asking for a NIS 50 million reduction, lowing the price tag to NIS 1.3 billion from NIS 1.35 billion.
In response, Bank Leumi opened negotiations with Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) chairman Lev Leviev and also contacted second-place finisher in the tender, Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL). Bank Leumi even officially notified York Capital in writing that it considered itself entitled to conduct negotiations for the sale of Psagot Ofek with other parties.
Migdal said in response, “Migdal has submitted no new bid of any kind at this time to buy Psagot Ofek from Bank Leumi.”
Capital market sources believe that Leviev will not buy Psagot Ofek at the current asking price.
York Capital is threatening to cancel the deal if its demands are not met. Bank Leumi is relying on a legal opinion by Adv. Dalia Tal that York Capital has no grounds for doing so. The bank has no intention of compromising on the price agreed in the original agreement, and even threatens to sue York Capital for breach of contract. Leumi & Co. Investment House VP Osnat Ronen is handling the negotiations on behalf of the bank.
Arie (Arik) Steinberg is on York Capital’s team. He was CEO of Ilanot Batucha before its sale to Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) in 2003, and is slated to become chairman of Psagot Ofek after the change in ownership. He mediated the original agreement, and is basically York Capital’s investment banker in Israel.
The sale of Psagot Ofek was thrown into doubt when the Israel Securities Authority made granting a license to York Capital conditional on Psagot Ofek general manager Gabriella Ravid and deputy CEO Daniel Silbiger leaving their posts. The reason is that they are two of the persons involved in the benefits-for-marketing mutual funds affair at Bank Leumi. Ravid and Silbiger and 12 other officials at Bank Leumi and its subsidiaries Leumi Pia Trust Management Company and Kahal Employees Supplementary Training Fund Ltd. are facing possible indictments, subject to a hearing before prosecutors.
Earlier this week, York Capital said that the Psagot Ofek’s value was significantly less without Ravid, and that if the Securities Authority saw fit to make granting a license to York Capital conditional on Ravid and Silbiger leaving their posts, York Capital no longer considered its agreement to close the deal to be binding.
Published by Globes [online], Israel business news - www.globes.co.il - on June 28, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006