Property & Building sells further 5% of Bayside

Eduardo Elsztain / Photo: Shlomi Yosef , Globes

Property & Building's stake thus falls below 30%, which may be enough to comply with the Concentration Law.

Property and Building Ltd. (TASE: PTBL) is reducing its holding in income producing real estate company Bayside Land Corp. Ltd.(Gav Yam) (TASE: BYSD1) to below 30%, following discussions held with the Ministry of Justice over the past few months. After the sale, the ministry may halt its examination of Property & Building's control of Bayside.

Property & Building notified the Tel Aviv Stock Exchange yesterday that it last Thursday it agreed a sale of 4.96% of the shares in Bayside to an unconnected private investor for NIS 191 million, which will bring its stake in Bayside from 34.9% to just under 30%.

The sale is at a price of 1,800 per Bayside share, which represents a discount of 2.2% on Bayside's closing price last Thursday. Bayside's share price rose steeply following the announcement. It is currently at NIS 1,999.

Property & Building says that when the deal is completed it will post a loss of NIS 32 million on it in its second quarter financials, subject to changes in Bayside's shareholders' equity.

Property & Building is the real estate investment arm of the IDB Development-Discount Investment group controlled by Eduardo Elsztain. The share sale boosts Property & Building's liquidity for the purposes of examining new deals, but also serves the purpose of complying with the Concentration Law, which the Ministry of Justice is responsible for implementing.

The provisions of the Concentration Law require Discount Investment to cut a level in its control pyramid, and to that end Property & Building sold 16.8% of Bayside, reducing its holding from 51.7% to 34.9%. Property & Building than declared that it had fulfilled the requirements of the Concentration Law and that it no longer controlled Bayside.

The Ministry of Justice, however, was not satisfied, and announced that it had started investigating the question of control because of the large representation that Property & Building had on Bayside's board of directors (three out of seven). An independent director recently joined the board, reducing the proportion of Property & Building directors.

Now, Property & Building has reduced its holding to below 30%, but there is no guarantee that this will be enough to sway the decision by the Ministry of Justice on whether or not to go to court on the question of compliance with the Concentration Law.

Published by Globes, Israel business news - en.globes.co.il - on May 18, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Eduardo Elsztain / Photo: Shlomi Yosef , Globes
Eduardo Elsztain / Photo: Shlomi Yosef , Globes
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