Israel-Canada (TASE: ISCN) will not be able to buy ISSTA Lines' (TASE: ISTA) 67% share in the Publica Hotel in Herzliya. Minority shareholder Reuven Ella has exercised his right of first offer, and the NIS 142 million deal will not go through with Israel-Canada. Ella now has the right to buy Issta's stake in the hotel.
Last December, Issta announced that it had signed an MOU for the sale of its stake in the Publica Hotel Herzliya to real estate company Israel-Canada, controlled by Barak Rosen and Asaf Tuchmair, for NIS 142 million. Issta estimated that it would post a pre-tax gain of NIS 38 million on the transaction. In today's announcement, Issta states that completion of the deal was subject to several preconditions, among them the consent of the minority stakeholder in the hotel, Ella, to forego his right of first offer in the founders' agreement. Ella has announced that he intends to exercise his right, and as a result the agreement between Issta and Canada-Israel will be annulled.
The Publica Hotel, on Abba Eban and Galgalei Haplada streets in the Herzliya Pituah industrial zone, is a described by Issta as a four-star business hotel. It has 160 rooms on six floors. Issta bought the land for the hotel in 2006 for $5 million.
In 2014, Issta signed an agreement to lease the hotel to its partner Ella for ten years at an initial annual rent of NIS 8 million. The rent is now NIS 11 million. In 2016, Ella brought Isrotel Ltd. (TASE: ISRO) into the lease agreement as a partner. Isrotel has managed the hotel since it started to open in stages in 2017. In its 2018 financial statements, Isrotel recorded a profit of NIS 200,000 on its partnership in the Publica Hotel.
Published by Globes, Israel business news - en.globes.co.il - on February 4, 2020
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