Holding company Kardan NV (TASE: KRNV;AEX:KARD) is stocking up on cash and getting rid of its exposure to the technology sector. Kardan Israel Ltd. (TASE:KRIS) today reported an agreement to sell Kardan Technologies, a fully-owned subsidiary, to an unnamed third party for NIS 58.4 million. The deal will yield Kardan a NIS 10-15 million capital gain.
Kardan Israel's main asset is a 57% holding in Kardan Real Estate Enterprise and Development (TASE: KARE), which deals in residential real estate and construction through its El-Har Engineering and Construction subsidiary. Kardan Real Estate's market cap is NIS 290 million, so Kardan Israel's shares in that company are currently worth NIS 165 million.
In addition to this holding, Kardan Israel previously made other investments in communications and technology through subsidiaries Kardan Communications and Kardan Technologies. Kardan Technologies is now being sold together with all of its investments, which include 8.34% of the shares in Cloudify Platform, 8.68% of the shares in GigaSpaces, a joint holding in the Aviv 2 fund, and 6.73% of the shares in Unicell (after conversion of the convertible bonds held by Kardan Technologies), which own 48.75% of the Pango payments app, a facilitator of payments for parking, auto, and road services by mobile phone.
As part of the sale of Kardan Technologies, it was agreed that for 72 months after completion of the deal, Kardan Israel would receive part of the proceeds received by the buyer from the holdings in GigaSpaces and Cloudify Platform. The parties also agreed that NIS 17 million of the proceeds in the deal would be deposited with a trustee for a given period for the purpose of indemnifying the buyer for damages caused by violations of presentations, tax liabilities, or law suits.
BFTV - Kardan Israel will continue holding 21.2%
Kardan Israel said that completion of the deal was scheduled within three months, subject to suspending conditions, including approval by the Antitrust Authority director general and confirmation that the situation of Kardan Technologies has not worsened. When the sale is completed, Kardan Israel will be left with its 21.2% holding in BFTV, which produces and broadcasts content for small children.
Kardan Israel's current market cap is NIS 230 million. The company finished the first half of 2018 with an NIS 8.4 million net profit attributable to shareholders and NIS 410.7 million in shareholders' equity.
The controlling shareholders in Kardan Israel are Avner Schnur (27.5%), Yosef Greenfeld (18.9%), and CEO Eytan Rechter (9.8%). Two other important shareholders are Dr. Gil Deutsch and Aharon Biram (CPA), each of whom holds 13.6% of the shares in the company. The public's holdings in Kardan Israel total only 16.7%.
Rechter personally owns 6.8% of BFTV's shares, while his daughter Sharon Rechter and son-in-law Guy Oranim hold 12.5% of the company, which they founded and manage. BFTV contributed NIS 2.5 million to Kardan Israel's net profit in 2017.
Schnur, Greenfeld, and Rechter also still control Kardan NV, which holds real estate activity in China, water engineering company Tahal Group, and 66% of the shares in Avis Israel. Kardan NV, however, is in advanced negotiations for a second debt settlement with its bondholders in which their controlling core (together with the cross holdings of Kardan Israel) will be diluted from 43.2% to 28.4%.
Published by Globes, Israel business news - en.globes.co.il - on November 15, 2018
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