Xfone Inc. (AMEX:XFN; TASE:XFN) and David Sela's Blokshtil Ltd. have settled their dispute three weeks after the sale of Xfone Inc.'s stake in its Israeli unit Xfone 018 collapsed. Blokshtil will pay Xfone NIS 2 million compensation, and Xfone will forfeit its claims against Blokshtil.

On November 20, the companies signed the deal for the sale of Xfone's 69% stake in Xfone 018 to Blokshtil for $6.9 million, to be paid in shekels in two installments. However, Blokshtil first check of NIS 11.4 million was returned for lack of funds.

Xfone's executives and Blokshtil blamed each other for the breach of agreement. The collapse of the sale also meant that Xfone failed to meet an interest and principal payment on its bond due in early December. Xfone ultimately secured alternative financing to meet the payment in full, plus interest on the arrears.

Xfone's executives can now turn their attention to finding a buyer for Xfone 018.

Xfone's share closed at $0.79 on the American Stock Exchange yesterday, giving a market cap of $13.6 million. The share fell 2.5% by mid-afternoon on the TASE today to NIS 2.80.

Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2009

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