Africa-Israel Investments Ltd. (TASE:AFIL), controlled by chairman Lev Leviev, has agreed to buy 9.7% of the shares in its Russian development arm, AFI Development plc (LSE:AFID) for $129 million.
Leviev is buying the entire stake in AFI Development from the subsidiary's CEO Alexander Khaldey, who owns the shares through his company, Nirro Group. He will continue in his post.
Africa-Israel will buy the shares at $1.27 per share, in two stages. It will initially buy 2.96% of AFI Development for $45 million. The balance of a loan to Nirro Group, taken at AFI Development's IPO in May 2007, will be deducted from these proceeds. Africa-Israel will purchase the remaining 6.74% in May 2011 for $84 million. When completed, Africa-Israel will own 64% of AFI Development.
Africa-Israel's debt settlement with its bondholders reduced its holding in AFI Development from over 70% to 54%.
Africa-Israel CEO Izzy Cohen said, "This agreement confirms the long term commitment of Africa-Israel Investments to AFI Development. We continue to see major growth opportunities in the Russian real estate sector and Moscow in particular, which AFI Development is uniquely positioned to realize."
AFI Development's share price rose 4.4% by midday in London to $1.30, giving a market cap of ₤725 million. Africa-Israel's share price rose 2.6% by mid-afternoon on the TASE to NIS 27.20, giving a market cap of NIS 2.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on January 26, 2011
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