Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), controlled by chairman Lev Leviev is selling its entire 26.14% stake in David Weissman-controlled Alon Israel Oil Company Ltd. in exchange for shares in Alon Oil's public fuel companies Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) and Alon USA Energy Inc. (NYSE:ALJ). Africa-Israel holds the stake, 2.2 million shares, through Africa-Israel Trade and Agencies Ltd.
As a result, Africa-Israel will no longer function as a borrower group with Alon Israel, which will relieve Africa-Israel of hundreds of millions of shekels in leverage.
Alon Oil's owners are chairman David Weissman and Shraga Biran through Bielsol Investments (1987) Ltd. and the Kibbutz Purchasing Organizations. Alon Oil owns 75% of Alon USA, which has a market cap of $480 million, 89.69% of Dor Alon, which has a market cap of NIS 911 million, and 70.1% of supermarket chain Blue Square Israel Ltd. (NYSE: BSI; TASE: BSI), which has a market cap of NIS 1.5 billion. Alon Oil's private companies have an aggregate market cap of more than NIS 2.5 billion, although they are heavily indebted.
When the deal with Leviev is closed, David Weissman and Shraga Biran will own 53.1% of Alon Oil and the Kibbutz Purchasing Organizations will own 46.9%.
Africa-Israel will receive 5.51% of Alon USA, currently worth $26.5 million, and has an option on shares, which if exercised in full, will increase its stake to 7.27%. The option, for between 3.29 million and 3.67 million shares, is exercisable between January 2010 and July 2011. The option is worth $32-35 million if exercised at Alon USA's current share price.
Alon Oil has undertaken to register for trade the Alon USA shares allotted to Africa-Israel. Market sources believe that Leviev plans to sell these shares.
Africa-Israel has a 36-month option to buy 982,863 million shares in Dor Alon, amounting to 7% of the company at NIS 55 per share, 15.4% less than the company's opening price of NIS 66 today.
Dor Alon's share rose 3.6% by midday today on the TASE to NIS 67.35. Alon USA's share closed at $10.24 in New York yesterday. Africa-Israel's share fell 4.4% to NIS 35.10.
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2009
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