Control of satellite photography company ImageSat International (ISI) is passing from Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) to FIMI Opportunity Funds. IAI and FIMI today announced that they had signed an agreement under which FIMI will invest $40 million for an allocation of shares amounting to 53.6% of ISI's share capital. IAI will retain the other 46.4%.
Completion of the deal is contingent on approval from the Ministry of Defense and the Antitrust Authority.
ISI will use the money from FIMI to buy a new observation satellite, Eros 3, built for it by IAI. The parties also agreed that when the deal is completed, ISI will pay a $35 million debt to IAI from a previously received $69 million owners' loan. The balance of the loan will be repaid in amounts and on dates stipulated in the agreement, but these payments will be subordinated to the annual dividend to which FIMI will be entitled by its preferred shares.
FIMI senior partner Gillon Beck said, "Satellites in general, including the observation satellites market in which ISI is active and the communication satellites market, in which we are present through our investments in companies such as Gilat Satellite Networks and Orbit Technologies, offer significant growth potential. ISI has interesting growth engines such as data and algorithm-based products. The collaboration between IAI and FIMI will help ISI soar to new heights in space."
IAI CEO Joseph Weiss emphasized, "FIMI's investment in ISI reflects IAI's strategy to create collaborations with business and financial entities, spin-off technologies to the civilian sector, and prioritize investments for innovation and technological entrepreneurship."
Eros CEO slated for 2020 launch
IAI, Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), and other investors founded ISI in 1997, but IAI became the sole owner. ISI, which is incorporated in the Netherlands Antilles, has dozens of employees in its offices in Or Yehuda and Limassol, Cyprus. The company's CEO is Lieutenant Colonel (res.) Noam Segal, who previously served in the air force, and later in senior positions in both Elbit Systems and Elisra Group.
ISI markets high-resolution photographs taken by electro-optic observation satellites. The satellite photographs are offered to ISI customers mainly by leasing specific geographic coverage areas (space segments) agreed by the company and its customers, in which the customer is granted exclusive, independent, and confidential control of the satellite photographs. ISI makes a profit, but its business is not growing substantially.
ISI's main customers are governments of sovereign countries that are not hostile to Israel. They obtain access to both high-resolution satellite photographs and to analysis of the data obtained from them. ISI has also developed advanced algorithms for detecting movements of vessels throughout the world using photographs from its satellites.
ISI uses commercial satellites from the Eros series developed and built by IAI. ISI currently operates one commercial satellite, the Eros B, which was launched in 2006. Its first satellite, Eros A, launched in 2000, is no longer in use.
Following FIMI's investment, ISI will go ahead with its plan to launch a third satellite, Eros C, also made by IAI. This OPTSAT 3000 high-resolution model is highly maneuverable and has advanced operational capability as a result of its light weight, among other reasons.
IAI said that it expected to post a NIS 7-13 million profit after the deal was completed. IAI director of business development Zvi Maayan said, "This is part of a larger measure that will enable IAI to focus on its strength - its leading technology. It is the first sign of a trend we will see in the coming years of selling activities to civilian companies and strategic partners."
Maayan says that Eros C will be a high-resolution satellite that will provide full color output, in contrast to other observation satellite produced by IAI for other countries, which take black-and-white photographs.
Owner: Israel Aerospace Industries
CEO: Noam Segal
Number of employees: 40
Location of management: Or Yehuda
Activity: Marketing and analysis of high-resolution satellite photographs
Published by Globes [online], Israel Business News - www.globes-online.com - on November 6, 2017
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