Securities Authority wants answers from Boymelgreen

Boymelgreen Capital approved covering NIS 17 million losses by Boymelgreen Developers related to the acquisition of Azorim.

The Israel Securities Authority is demanding explanations from Shaya Boymelgreen for his request to Boymelgreen Capital Ltd. (TASE:BMGN) shareholders to cover NIS 17 million in losses made by Boymelgreen Developers LLC on a long position on the dollar taken as a hedge for the acquisition of Azorim Investment, Development and Construction Ltd. (TASE: AZRM).

The Securities Authority wants to know why Boymelgreen made the request retroactively rather than at the time. Boymelgreen Capital said the shareholders failed to explicitly approve the transfer of Azorim from Boymelgreen Developers to Boymelgreen Capital. A second general shareholders’ meeting was therefore necessary.

More interesting is whether Boymelgreen Developers would have transferred to Boymelgreen Capital any profit made on the long position. Shaya Boymelgreen says he would have.

Boymelgreen Capital’s directors support chairman Shaya Boymelgreen. The board says that had Azorim been acquired directly by Boymelgreen Capital, the company would have taken the long position on the dollar. The company adds that the loss on the derivatives, the shekel’s appreciation against the dollar nevertheless helped the company because the shekel proceeds paid were lower.

Shaya Boymelgreen and asked the Boymelgreen Capital shareholders to approve the establishment of a financial unit in the company, which will lend money to third parties in the real estate industry and produce various sophisticated financial instruments. An initial investment of $10 million will be needed for this venture, in which Boymelgreen Capital will own 20% and half of the voting rights.

Published by Globes [online], Israel business news - www.globes.co.il - on March 27, 2007

© Copyright of Globes Publisher Itonut (1983) Ltd. 2007

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