The contest between YH Dimri Construction & Development Ltd. (TASE: DIMRI) and Lapidoth Capital for the acquisition of control of Africa Israel Investments Ltd. (TASE:AFIL) continues, despite an initial vote by Africa Israel's bondholders in favor of Lapidoth. Lapidoth Capital reported today that it had raised its bid by NIS 86 million to NIS 1.33 billion.
Like the previous bids, the current bid was in the framework of Lapidoth Capital's strategic partnership with Altshuler Shaham Provident Funds and Pension. The partnership agreement will give Lapidoth Capital 80% of Africa Israel, while Altshuler Shaham Provident Funds and Pension will hold the other 20%.
The revised bid by the two partners to the bondholders includes a NIS 620 million cash payment and transfer of 20% of the shares in Africa Israel sub-subsidiary Africa Israel Residences, a stake with a current value of NIS 223 million. The bondholders will also receive Africa Israel's NIS 487 million in cash assets (minus payments to the Israel Tax Authority and the settlement costs).
Lapidoth Capital, controlled by Jacob Luxenburg, and Altshuler Shaham Provident Funds and Pension say that their bid is better than the competing bid, because it includes full payment of the price they are offering (a total of NIS 843 million) as soon as the deal is completed. They also write that they are prepared to complete the deal immediately, and have completed the negotiations and wording of a settlement with the bond trustee and representatives of the bondholders, so that the debt settlement documents can be submitted to the court immediately.
Lapidoth Capital plans to fund the payments for the settlement with its cash and unused lines of credit. The company also reported that it was planning to raise NIS 350-450 million in debt. This financing includes issuing NIS 50 million in rights to existing shareholders for the purpose of purchasing additional shares, issuing shares to the public for NIS 100-200 million, and issuing NIS 100 million in new Series A bonds.
Lapidoth Capital said that it was not active in real estate development and construction, and that approval of its bid by the Israel Competition Authority director general would be obtained quickly. In contrast, YH Dimri Construction & Development, controlled by Yigal Dimri, also deals in residential real estate development, and will therefore have to show the court approval from the Competition Authority director general, which will require a lengthy examination.
Meeting postponed from today until Sunday
Following Lapidoth Capital's improved bid, the trustees for the three Africa Israel bond series (Series 26-28) postponed the voting meetings scheduled for today until this coming Sunday. The meeting will vote on a resolution to accept one of the bids by Lapidoth Capital and YH Dimri Construction & Development. As of now, it appears that the value of the current bid by YH Dimri Construction & Development is NIS 1.294 billion, lower than the bid by Lapidoth Capital.
At last week's meeting, Africa Israel's bondholders decided to instruct the trustees for the three bond series not to petition the court to convene a meeting to approve Lapidot Capital's bid, after YH Dimri Construction & Development improved its bid.
In its current limited form, Africa Israel has two main activities. Africa Israel owns 100% of contracting and infrastructure company Danya Cebus, which itself holds a 74% controlling interest in residential construction developer Africa Israel Residences, a stake with a current value of NIS 830 million. In addition to these two assets, Africa Israel also has a large stock of cash and land in Savyon.
Africa Israel owes its bondholders NIS 2.25 billion. According to the bids to acquire it, the value of its assets is about NIS 1 billion less than its liabilities, meaning that it is in a state of bankruptcy. The debt settlement will therefore cancel all of Africa Israel's existing shares held by Lev Leviev and the public.
Published by Globes, Israel business news - en.globes.co.il - on October 3, 2019
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