Barak can't exercise InterCure options if he resigns

Ehud Barak Photo: Eyal Izhar

Ehud Barak, who is planning on running in the elections, will have to resign the chairmanship of InterCure if elected.

Ahead of the planned offering on Nasdaq by Israeli cannabis company Canndoc, it appears that Ehud Barak, the company's chairman (and chairman of InterCure, Canndoc's parent company) and door opener in the international market, is preoccupied with other business. Barak yesterday announced his intention of running the upcoming Knesset elections in September. If he makes it into the Knesset, he will certainly be unable to continue as the company's chairman.

Barak can continue in his position until he is officially elected, although it is likely that he will have less time than before to devote to it. InterCure's share price is up 20% today, pushing its market up to NIS 860 million.

InterCure today notified the Tel Aviv Stock Exchange (TASE), "Barak informed the company that he predicted a great future for it and for Canndoc, and was a great believer in the company's activity and his own activity in them. He said that he would continue in these positions even after his return to political life, until the last date on which he can legally serve in his positions."

Barak was appointed chairperson of InterCure in September 2018, setting off a wave of recruitment among former politicians, defense establishment figures, police officers and other notables by TASE-listed cannabis companies. Barak is so far the only celebrity to pull off a major coup in one of these companies - he mediated a $12 million financing round led by US billionaire Gary Fegel. Fegel, or his wife, Yael, went on to invest tens of millions of shekels more in the company through the TASE, giving InterCure's share price a big boost (thereby helping the entire cannabis sector in Israel) in late 2018 and early 2019. 17% of InterCure's shares are now registered in Yael Fegel's name.

For his work as chairperson of InterCure, Barak is paid $10,000 a month for at least 40 hours work. He also received convertible options with a current value of NIS 21 million on paper. These options were worth twice as much before the 44% slide in InterCure's share since February. Only a third of these options can be exercised immediately; if Barak resigns, he will be unable to exercise the rest of them.

If Barak is elected to an important position and resigns from InterCure, his resignation is likely to given him an opportunity to sell all of his options in the company without this being perceived as a lack of confidence in it. These circumstances could also give the company an opportunity to appoint someone with a background in pharma, agriculture, or the capital market as chairperson before the Nasdaq offering for Canndoc. Barak served his purpose of bringing investors, doing Israeli and international public relations for the company, and supporting its image as a serious business, despite being in a sector previously considered dubious.

The controlling shareholder in InterCure is Alex Rabinovich, an experienced medical investor in Israel and on Nasdaq.

Another politician, former Minister of Justice Ayelet Shaked, began testing the water for joining a cannabis company after her New Right Party failed to get enough votes to enter the Knesset in the last elections. With new elections in prospect, Shaked returned to the political arena, but was seen again yesterday in the company of Cannbit controlling shareholder Barak Rosen, so this connection may still be possible.

Published by Globes, Israel business news - en.globes.co.il - on June 27, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Ehud Barak Photo: Eyal Izhar
Ehud Barak Photo: Eyal Izhar
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