In a breakthrough in the process of the sale of IDB Development's 70% stake in Discount Investment, being managed by the receivers Adv. Raanan Kalir and Adv. Alon Binyamini together with the court appointed trustee of IDB Adv. Ophir Naor, a consortium headed by real estate company Mega Or (TASE: MGOR), controlled by Zahi Nahmias, has made an improved offer.
Under the terms agreed between the parties, the Mega Or consortium has offered to buy 70% of Discount Investment for NIS 950 million cash. This represents an addition of NIS 60 million over the consortium's previous offer, made last week. In return, the trustee has agreed that any competing offer will have to be at least NIS 990 million.
The Mega Or offer means that IDB's NIS 890 million debt to its series 14 bondholders, who have a lien on the Discount Investment shares, will be repaid in full The NIS 60 million addition will go towards partial repayment of the unsecured series 9 bondholders, who are owed NIS 910 million.
The approval request submitted to the court states that Mega Or has agreed to provide bank guarantees amounting to NIS 95 million.
Nahmias's agreement with the receivers and the trustee presents a big challenge to IDB Development's former controlling shareholder Eduardo Elsztain, who recently offered NIS 908 million for the Discount Investment shares.
Mega Or plans to buy 24.99% of the shares in Discount Investment while the balance will be bought by other investors, among them vehicle importer Rami Ungar. The reason for this is that Discount Investment is defined as a two-tier control pyramid, and its acquisition by another public company would create a three-tier pyramid, which is barred under Israel's Concentration Law. With a holding of 24.99%, Mega Or will not come within the definition of owner of a controlling stake.
Discount Investment currently has a market cap of NIS 1.08 billion, after its share price shot up by 60% following the court decision to deprive Elsztain of control.
Discount Investment holds controlling stakes in Property and Building Ltd. (TASE: PTBL ) (74%), Cellcom (46%), Mehadrin Tnuport Export LP (TASE: MEDH ) (44%), Elron Electronic Industries Ltd. (TASE: ELRN ) (61%), and Epsilon Investment House Ltd. (69%).
The auction of IDB Development's Discount Investment stake will last three weeks, until November 4.
An auction is also taking place of Israir, which IDB Development owns outright. The auction will close on November 8. Two potential bidders have so far expressed interest. One is BGI Investments, controlled by Rami Levy and Shalom Haim (through Taaman), which has said it will offer NIS 70 million for the airline. The other is Dubai-based NY Koen.
Published by Globes, Israel business news - en.globes.co.il - on October 15, 2020
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