The plan for consolidation of shares in Israel Land Development Company (TASE: ILDC) has been approved. Over 90% of the minority shareholders in the company supported the proposal at a shareholders' meeting convened yesterday. The Nimrodi family reached agreements with the investment institutions and consultancy company Entropy on canceling the family's foundation stocks in order to consolidate the shares in the company.
Israel Land Development deals in real estate development and investment in Israel and Europe. Yaakov Nimrodi, who bought the company from the Jewish Agency and Bank Leumi in 1989, now holds 30 foundation stocks that give him 50% of the voting rights in the company. The Nimrodi family also has ordinary shares in the company through which Yaakov Nimrodi and his son, Ofer, Israel Land Development's CEO, who exercises actual control over the company, hold 67% of the capital shares and 83% of the voting shares in Israel Land Development.
The current state of the company, a unique entity in the Israeli capital market, gives Yaakov Nimrodi absolute control of the company at every general shareholders' meeting. Since the company has two different types of shares, however, it is unable in practice to issue shares in the capital market. Canceling foundation shares will enable Israel Land Development to do this.
In the original deal promoted by the Nimrodi family in order to change the situation, it proposed that Israel Land Development allocate 17 million non-marketable options exercisable for ordinary shares to a private company owned by Yaakov Nimrodi. Entropy and the investment institutions (Phoenix, with 6%, and Menorah Mivtachim, with 6.5%, are the two largest investment institution with holdings in Israel Land Development's capital) opposed the plan proposed by the Nimrodi family. Under the new plan proposed, which Entropy and the investment institutions approved in principle yesterday, the number of options that the Nimrodi family will receive was reduced to 16.5 million, and the discount on exercising them was reduced to 11-14.8% for 8-15 years following approval of the deal. If fully exercised, the options allocated will give Yaakov Nimrodi 37% of Israel Land Develop's capital. Following the changes, the fair value of the options was estimated at NIS 49 million.
Now that the deal has been approved, Israel Land Development can raise money by issuing shares - something it was unable to do in recent years, which hampered the company's development. The company's management is planning to raise hundreds of millions of shekels in the coming years (mainly through the exercise of the Nimrodi family's options).
Israel Land Development's share price has climbed 46% this year, pushing its market cap up to NIS 1 billion.
Published by Globes, Israel business news - en.globes.co.il - on August 5, 2019
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