Sources inform ''Globes'' that the Ministry of Finance is speeding up negotiations to sell its right to dividends from toll road Road 6 (the Yitzhak Rabin Highway, also known as the Cross-Israel Highway) franchisee Derech Eretz Highways (1997) Ltd.
Lev Leviev-controlled Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) unit Danya Cebus Ltd. (TASE: DNYA), and Shari Arison-controlled Shikun u'Binui Holdings Ltd. (TASE: SKBN) unit Shikun u'Binui Solel Boneh Building and Infrastructure Ltd. each own 37.5% of Derech Eretz and Aecon Construction Group Inc. (TSX: ARE) unit Canadian Highways Infrastructure Consortium (CHIC) owns 25%. The government can receive 49% of Derech Eretz's dividends. Africa-Isael may sell its stake in the company at the same time.
The three candidates for advising the Ministry of Finance's sale of its dividend rights are BDO Ziv Haft, Galram Ltd., and a group that includes Michal Bar-On, the daughter of former finance minister Ronnie Bar-On. The ministry reportedly wants to sell its rights via tender, probably to institutional investors, some of whom have already expressed an interest in a deal.
The buyer will get the rights to 49% of Derech Eretz's dividends between January 2010 and June 2029, as well as 49% of the principal and interest payments on Derech Eretz's owners' loans, which are defined as subordinate debt. The debt is NIS 550 million.
Derech Eretz's franchise contract sets out a mechanism for the government to sell its rights to the company's dividends to a third party. In January 2006, Sigma Group, founded by Prof. Dan Galai, valued the option at NIS 400 million, and it is now estimated to be worth NIS 500 million.
Road 6 runs 140 kilometers from the Ein Tut Junction near Yokne'am in the north to the Ma'ahaz Junction north of Beersheva in the south. It has 13 interchanges.
Published by Globes [online], Israel business news - www.globes-online.com - on November 4, 2009
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