Avi Gross, who was once supposed to acquire part of Tnuva Food Industries Ltd. from Mivtach Shamir Holdings Ltd. (TASE:MISH), is now investing in a different company that is also affiliated with Mivtach Shamir. He will invest up to $2 million in Elbit Vision Systems Ltd. (Bulletin Board: EVSNF), a developer of inspection systems for in-line and off-line applications and product quality control. The company will use the investment to expand operations in Asia.
Elbit Vision will initially allot to Gross 5.3 million shares for $500,000, at $0.095 per share, a 15% premium on the market price. Gross will also extend the company a $300,000 loan, convertible into equity within six months at the same share price. If he decides not to convert the loan, the company will repay it in 12 installments plus interest.
Gross will also receive two warrants: the first to invest up to $200,000 in the company at the same share price; and the second to invest up to $1 million at $0.20 per share through February 2015, subject to certain conditions.
Gross is entitled to appoint an observer to the company's board of directors, and should he convert and/or exercise at least 50% of the value of loan and the first warrant, he will be entitled to appoint a member of the board.
Elbit Vision's controlling shareholders are CEO Sam Cohen and CFO Yaron Menashe, who acquired control of the company 18 months ago from Mivtach Shamir. They each own 28.6% of the company. If Gross exercises his warrants and converts the loan into equity, he will own 19% of the company, and Cohen and Menashe will jointly own 38%.
Elbit Vision has a market cap of $6 million, and had just $370,000 in cash at the end of September. It posted $5.3 million revenue in January-September, 26.3% more than in the corresponding period of 2011, and it posted a net profit of $1 million.
In the 1990's, Gross founded US textiles company Divatex Home Fashions Inc. In 2007, he sold 80% of the company to India's Himatsingka Seide Ltd. (BSE: 514013) at a company value of $75 million, and he recently resigned from managing the company.
Although Gross has not been appointed to an official position at Elbit Vision, he will help the company expand in Asia, where he is familiar with many textiles companies, potential customers of Elbit Vision. The company currently operates in Asia through distributors, but it plans to switch to direct operations, and has already hired local employees in India and China.
"Gross brings a wealth of knowledge from his lifetime of successful business experience in the textile industry worldwide which Elbit Vision has identified as our primary growth sector," said Cohen. "He shares our belief in and commitment towards this dynamic market. His global business network will be an asset to our marketing strategy while his extensive experience will be a resource for our expanding product portfolio."
Gross said, "Elbit Vision has developed incredibly innovative vision inspection products which address a real need in the textile industry."
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2012
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