FIMI Opportunity Funds, led by founder and CEO Ishay Davidi, is in advanced negotiations to acquire control of satellite photography company ImageSat International, owned by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1). IAI today reported to the Tel Aviv Stock Exchange (TASE) advanced talks between the parties for bringing FIMI into ImageSat as a partner in a deal that would include a monetary injection by FIMI in exchange for an allocation of shares.
The negotiations between the parties are now in their final stages, and if they are successful, a signed deal is expected to materialize in the near future. According to the emerging agreement, FIMI will inject $40 million into ImageSat for an allocation of 55% of its shares, reflecting a company value of $75 million after money for ImageSat.
In addition to ceding control of ImageSat in the deal, IAI will probably have to waive most of the satellite company's debt to it, which has a nominal value of $67 million. Full repayment of this set is scheduled for May 2018, but in view of FIMI's time-tested policy, it is difficult to believe that it will agree to the transfer of its entire investment to ImageSat's creditor within a year.
Plan for more satellite launches
As far as is known, ImageSat is a profitable company, but its business is not growing much. Judging by past experience, FIMI will seek to enhance ImageSat's business by opening it to new spheres of business. One way of doing this is to go ahead with an existing plan for launching more satellites into outer space, and most of FIMI's investment will probably be used for this purpose.
IAI, Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), and other investors founded ImageSat in 1997, but IAI is currently its sole owner. The company, which is incorporated in the Netherlands Antilles, employs several dozen workers in offices in Or Yehuda and Limassol, Cyprus. The company's CEO is Lieutenant Colonel (res.) Noam Segal, who formerly served in the air force and subsequently in senior positions in Elbit Systems and Elisra Group.
ImageSat markets high-resolution satellite photographs taken by electro-optical observation satellites. Most of the photographs are offered to the company's customers through the leasing of coverage of specific geographic areas (space sectors) determined by the company and the customer. Customers are given exclusive, independent, and confidential control over the photographs taken in their assigned area.
ImageSat's main customers are governments of countries that are not hostile to Israel. The company provides them with both access to high-resolution satellite photographs and analyses of the data obtained from the photographs.
ImageSat has also developed advanced algorithms for using the satellite photographs to spot movements of vessels around the world. The satellites used by ImageSat are commercial photography satellites from the Eros series developed and manufactured by IAI. ImageSat currently operates one observation satellite, Eros B, launched in 2006. Its first satellite, Eros A, launched in 2000, is no longer in use.
According to past media reports, in 2005, before Eros B was launched, ImageSat sought to raise $120 million in a Nasdaq IPO at a $400 million company value, but the idea was eventually abandoned.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 19, 2017
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