Israel Corp. finances Better Place investment with ICL sale

Israel Corp. has put another $72 million into the electric car venture.

Israel Corporation (TASE: ILCO) is financing yesterday's $72 million additional investment in Better Place LLC with proceeds from the sale of shares in Israel Chemicals Ltd. (TASE: ICL).

For the first time since Sammy and Ido Ofer's Ofer Holdings Group acquired control in Israel Chemicals, they sold a bloc of 8 million shares - 0.63% - in the company for NIS 395 million. The sale boosted Israel Corp.'s shareholders' equity by $85 million.

The sale is no small matter. In contrast to other holding companies, which buy and sell subsidiaries on a regular basis, the Ofers very rarely do so. Their last transaction in Israel Chemicals shares was four years ago, when Israel Corp. bought a bloc of shares for NIS 150 million.

Sources close to the sale of Israel Chemicals shares said that the purpose was to finance its participation in Better Place's $350 million financing round yesterday -Israel Corp. is putting up 20% of the investment. Israel Corp chairman Idan Ofer is also chairman of Better Place, and he is an enthusiastic supporter of Shai Agassi's electric car venture.

Although Israel Corp. is considered a financially solid company, its condition is not straightforward. Profits of Israel Chemicals, its main holdings, have slumped with the stagnation in the global potash market. Israel Corp. has also had to inject hundreds of millions of dollars into financially distressed Zim Integrated Shipping Services Ltd.

Some analysts are not happy about the sale of Israel Chemicals shares. Clal Finance analyst Aviran Revivo said, "We see the sale as a negative signal for Israel Chemicals' share and the position of the company's controlling shareholder about the share's current price and potential of a rise in value."

Published by Globes [online], Israel business news - www.globes-online.com - on January 26, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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