First Israel Mezzanine Investors Fund (FIMI) is to invest $50 million in Kardan NV (TASE: KRNV;AEX:KARD) unit Tahal International Group BV.

Tahal and FIMI have signed a letter of intent, in which FIMI, an Israeli private equity fund has undertaken to provide a $50 million loan. In exchange, FIMI will receive warrants of up to $50 million to purchase an equity stake in Tahal.

In October 2009, Kardan announced that Tahal was looking to raise capital to benefit from opportunities in the global water infrastructure market.

Kardan’s Chairman Alain Ickovics said “The transaction will enable Tahal to increase the pace of investments in the (water) infrastructure market in emerging countries. Due to a lack of clean water in these markets there are numerous opportunities providing high returns on investment."

According to the letter of intent, FIMI will lend Tahal $25 million on closing of the transaction and provide an additional facility in the same amount, which will be available for one year after closing. The loan is to be repaid in four years and bears an interest of six month Libor plus 3%. On the basis of the letter of intent, Tahal will issue warrants to FIMI, which allow FIMI to purchase shares in Tahal.

Published by Globes [online], Israel business news - www.globes-online.com - on May 17, 2010

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