Plastro Irrigation Systems Ltd. (TASE: PLSTR) is facing a strange scenario. Its controlling shareholder, Australian billionaire John Gandel has signed an agreement for the sale of his entire holdings in the company to none other than his representative in Israel, Ori Yogev, or to be more precise, the investment fund controlled by Yogev and several other Israeli investors. Gandel will sell his holdings at a price of NIS 8.75 a share, 45% above the price on the Tel Aviv Stock Exchange (TASE).
Despite the agreement between the two sides, there remains a possibility that the new investment fund will not get control of Plastro after all. Kibbutz Gvat, which previously sold half its holdings to Gandel, has two options in the pending deal. It can either sell its stake to Yogev at the price it sold to Gandel, or alternatively, it can exercise its right to acquire Gandel's holdings. If this happens, Kibbutz Gvat will become the sole controlling shareholder in Plastro. The Kibbutz will make its decision in the near future. Should the fund led by Yogev be the one to buy the holdings, Yogev will cease to manage Gandel's businesses.
Gandel will probably not look back on his association with Plastro as an exceptionally successful one, since he will have no doubt been disappointed by the company's dismal results for 2006, after it had to publish two successive profit warnings, and eventually reported a loss of NIS 20.4 million. Nevertheless, he will not walk away from the investment in Plastro with a hole in his pocket. Although he entered the company at a price of NIS 10.70 a share, the stock price was recently adjusted, so that the weighted price of the stock was actually NIS 7.40, 20% less than the price he was supposed to be getting from the investor group. Put differently, not only has Gandel not made a loss on his exit from this faltering company, but he has even made a profit.
Yogev intends to continue expanding the company's business, with emphasis on new activity in North America, and Mexico. Omri Lotan is due to take over as company CEO in the coming days.
Published by Globes [online], Israel business news - www.globes.co.il - on April 4, 2007
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