The deal for the transfer of control of drone aircraft manufacturer Aeronautics to the Viola Private Equity, KCPS & Co. and Bereshit funds will be completed in the next few days, sources inform "Globes." Under the deal, the three funds will inject $15 million into the company. The Bereshit and KCPS leverage funds, which invested $35 million in Aeronautics in September 2011 in capital and loans, will convert the debt to them to equity.
When the deal is completed, the three funds will own 70% of Aeronautics. The main shareholders before the move, brothers Avi and the late Aharon Shaked, among the owners of online gaming company 888 who invested in the company in 2007, will be diluted to a holding of 20%. The remaining shareholders, among them Poalim Capital Markets, Moshe Caspi, and founder Avi Leumi, will also be diluted, and will collectively own 10%.
Bank Hapoalim (TASE: POLI) and Israel Discount Bank (TASE: DSCT) will also participate in the financial restructuring. Aeronautics owes them some NIS 50 million. The debt to these banks, which is already classified as "special credit" because of breach of loan covenants, will be rescheduled over a longer period. The banks will also give the company a new credit line to enable it to continue day to day operations.
Aeronautics is also in debt to mezzanine fund Mustang, set up by Yair Seroussi and Dan Tahori. The fund gave Aeronautics finance of $20 million in 2009. The company used the fund to buy Motorola's fuses unit. The balance of Aeronautics' debt to Mustang is about $6 million, and, in the negotiations between the parties involved, it is emerging that the repayment schedule for this debt will not alter, although there may be last minute changes.
After completion of the deal, Aeronautics will try to recover after two difficult years culminating in heavy losses and layoffs of employees. A source close to the new controlling shareholders told "Globes" today, "The company's balance sheet is changing completely, and the company is being strengthened and setting off on a new path. It won't be easy, but the company will be stronger."
Aeronautics declined to comment on the report.
Published by Globes [online], Israel business news - www.globes-online.com - on January 10, 2013
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