Exactly four years have passed since "Maariv" made its first, and so far, only issuance to the public. Yesterday the stock exchange distributed the prospectus for the second issue of the communications division of the Israel Land Development group. "Maariv" intends to raise NIS 49 million in straight bonds maturing in the years 2003 - 2005, with principle and interest linked to the representative exchange rate of the dollar, bearing variable annual interest rate at Libor for dollar deposits.
As in ’94, so now, the Nimrodi family, controllers of Israel Land Development Company, are taking an active part in raising capital for group companies.
Following a previous wave of capital raising exercises by companies in the group, complaints were made against the Nimrodi’s that they sold shares to the public at inflated prices. Investors from the public will have no cause to complain about this issue, for the simple reason that "Maariv" is issuing straight bonds with no share, or conversion, component.
Value: Maariv Holdings is trading at its highest value ever, some $110 million. This follows a more than 500% rise in its share price since the end of ’96, and a rise of 64% since the beginning of this year. This value is more than three times greater than the company’s equity. Incidentally, "Maariv’s" main rival, the "Yediot Aharonot newspaper", is estimated to be worth a few times more, at some $700 million, based on the price estimated to have been paid for 24.6% of its shares by Eliezer Fishman and the late Haim Bar-On.
Profitability: As in ’94, so now, the issue by Maariv Holdings is being made after a year of record profitability: net profit was NIS 22.4 million in the first nine months of ’97, which, more than all else, indicates a drastic reduction in paper prices.
Circulation: "Maariv" estimated today that newspaper sales have declined in comparison with "Yediot Aharonot" since the Nimrodis took over the company’s management, from a ratio of 1:4 in favor of Yediot in 1992, to 1:1.5 today. In the third quarter of ’97 "Maariv" distributed 190,000 copies on average per weekday, and 330,000 on Fridays and the eve of holidays.
Revenue: Compared to the third quarter of ’96, there has been a very slight 1.1% increase in income from newspaper sales, totaling NIS 44 million. There was a greater, 7%, increase in advertisement sales, which totaled NIS 63.8 million.
The first nine months of ’97 ended with income from newspaper sales at NIS 132 million, a 2.8% increase, while advertising income reached NIS 179 million, a 4.4% increase.
Ownership: Since "Maariv’s" first issue in ’94, the Israel Land Development Company has exploited the decline in "Maariv’s" share price by increasing its relative holding in the company. At the time of that issue, ILDC was to have diluted its share to 84.75% of the newspaper’s shares. At the time of this issue it holds more than 90%, split between it (88.87%) and Ofer Nimrodi, chairman of the company’s board.
Israel Land Development Company does not intend to dilute (the bonds are not convertible) in the current issue. It has undertaken to purchase up to 50% of the bonds offered.
Payroll and benefits: In the first nine months of ’93 Ofer Nimrodi raked in salary and bonuses of NIS 735,000 from "Maariv". Last year, at the end of a similar period, Nimrodi received NIS 1.4 million, almost double. Nimrodi enjoys a NIS 58,000 per month salary at "Maariv", and a bonus of 3% of the company’s pre-tax profits, which this year were higher than ever.
In addition, "Maariv" has placed at Nimrodi’s disposal a Range Rover car with all expenses paid (including tax expense), and they pay 7.5% of his monthly salary into an advanced study fund.
Published by Israel's Business Arena March 3, 1998