Alex Shnaider buys 21% stake in Mishorim

Alex Shnaider

The Canadian billionaire paid NIS 39 million, reflecting a company value of NIS 185 million for Mishorim.

Canadian-Jewish billionaire Alex Shnaider, former owner of the Maccabi Tel Aviv soccer team, is investing NIS 39 million in the Mishorim Development Ltd. (TASE:MSHR) real estate company controlled by developer Gil Blutrich. Mishorim this morning reported that the company would allocate 6.5 million shares, amounting to 21% of its capital after the issue, to JE Finivest, a company controlled by Shnaider, reflecting a company value of NIS 185 million, after money. The private placement is at NIS 6 a share, 36% higher than the NIS 4.40 market price at the start of today's trading.

Mishorim will also grant Finivest options exercisable at NIS 9 per share for an additional investment of up to NIS 13 million. If fully exercised, these options will amount to 4.5% of Mishorim's shares capital. Blutrich's holdings after the private placement will be diluted to 53%.

Shnaider has already been previously involved in Mishorim's business. In 2010, he was one of the investors, together with Mishorim Canadian subsidiary Skyline International Development Inc. (TASE: SKLN), who acquired the King Edward Hotel in Toronto for 48 million Canadian dollars. The Mishorim share responded to the report by leaping, after having remained stable during the preceding year. Mishorim's current market cap is NIS 120 million, after the share lost half its value over the past three years.

Shnaider: "Mishorim is underpriced"

Shnaider stated, "We have been following the business of Mishorim and its Skyline subsidiary in markets in Canada and the US for some time, and found it an attractive addition to our investment portfolio. We believe in the company's management, its properties, and its business strategy, and hold that it has significant potential value for its shareholders, due to both the projects that are likely to mature in the near future and the process of upgrading taking place in some of the company's properties. We also believe that because of the complexity of Skyline's projects in Canada, the capital market is underpricing the company, and we regard the current deal as an excellent opportunity to invest in these projects at a price that is comfortable for us."

Mishorim CEO Rami Shriki said, "This is a significant milestone for Mishorim, both business-wise and financially. We are delighted with Alex Shnaider's vote of confidence in the company and its future growth potential. Shnaider is a leading businessman with far-flung business in Canada, and is very familiar with the company's business in that company. The Mishorim board of directors said that the investment "would strengthen the company's capital base and improve its financial soundness in general, and the financial ratios with which it must comply." The company said it had considered several alternatives for an investment and raising capital, and had found that "raising capital by means of a private placement of the company's shares is a fairly quick measure incurring relatively low costs."

The trend in the share of Skyline, the Canadian company controlled by Mishorim, which accounts for most of its business, was positive today. The share of Skyline, which joined the TASE in early 2014, has since lost a quarter of its value, and now reflects a market cap of NIS 400 million. Skyline has been operating in North American in real estate development, hotel management, vacation resorts, and income-producing real estate for over 15 years. The company's main properties include three resorts in Canada, one in California, and three hotels in Canada and the US. Mishorim controls Skyline through a private company its owns jointly with Ofer Nimrodi's Israel Land Development Company (TASE: ILDC) (Mishorim - 70%, Israel Land Development - 30%).

Other than Skyline, Mishorim, founded by Blutrich in 1990 and listed on the TASE in 2007, owns 11 income-producing properties in Israel, mainly offices; eight income-producing properties in the US, mainly commercial space; and apartment projects. Mishorim's revenue was up 1.5% to NIS 240 million in the first nine months of 2015, and its gross profit improved, but a downward revaluation of its properties detracted from its operating profit, and the company finished January-September with a NIS 5.6 million loss.

The Canadian-Jewish billionaire who sold Maccabi Tel Aviv to Goldhar

Shnaider, 47, is the founder of the Midland Group holding company, which has holdings in steel, agriculture, real estate, and industrial manufacturing. Shnaider, married with three daughters, was born in St. Petersburg. His family immigrated to Israel when he was a child, and he grew up in Israel for a few years before his family emigrated to Toronto, where he lives to this day. He was formerly on the Forbes list of billionaires with a personal worth of $1.3-1.6 billion, but was not included on the 2015 list.

Shnaider is considered a self-made man, after the group he founded in 1994 with his partner, Eduard Shifrin, became one of the largest companies in Ukraine in steel, real estate, and shipping. He began his career as a textile trader when he was still a student at York University in Canada. He later acquired a Ukrainian steel company sold as part of the privatization wave in the 1990s.

18 months ago, together with a group of businessmen, Shnaider won a lengthy legal proceeding begun in 2007 involving oil investments in Russia. Shnaider was sued for $750 million in a claim alleging that he had violated contracts and paid bribes to public officials in Russia to stop the claimant. Shnaider filed a countersuit alleging an attempt to defraud him. In March 2014, a Canadian court ruled that Shnaider and his partners had not violated any contract, and awarded them damages of $138 million.

In December 2007, Shnaider became a household name among sports fans in Israel by acquiring the Maccabi Tel Aviv soccer team. He bought an 80% stake in the team from Eylon "Lonny" Herzikowicz for NIS 70 million. He was involved in sports before that as owner of a Formula 1 team for less than two years. He did not retain the soccer team for long either, selling it in August 2009 to another Canadian businessman, Mitchell Goldhar, who still owns it.

Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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