At least four different groups are now competing for control of food company G. Willi-Food Investments Ltd. (TASE:WLFD) through the acquisition of control over one or more of the companies above it in the ownership chain: private company Israel 18, BGI Investments (1961) Ltd. (TASE: BGI), and BSD.
"Globes" has now discovered that those involved are Willi-Food cofounder Zwi Williger (who, together with his brother Joseph, has already exited the company twice, garnering hundreds of millions of shekels in the process); a group of investors represented by Prof. Joseph Gross; food company Taaman, controlled by Shalom Haim; and a pair of US investors, Shaul Kopelowitz and Nachum Labkowski.
Advocates Yaron Kaiser and Hezi Sidon from the Glusman & Co. law firm, which the court appointed as trustee for the controlling interest in BGI and some of the BSD shares, today filed an urgent request to the court that it should issue orders and a temporary remedy in order to prevent any deal involving the trusteeship shares.
The lawyers asked for a one-month extension to complete an optimal sale of the shares, including a pricing procedure among the parties, if necessary. Tel Aviv District Court Judge Khaled Kabub approved an extension until August 25 of the temporary restraining order against any disposition of the shares, in other words, for one more week.
It cannot be ruled out that other bids will be made in the near future. According to the trustees, "Additional bidders have announced their intention of making high bids that are substantially higher than the debt to the petitioners."
Willi-Food, which has a NIS 180 million market cap, imports, exports, markets, and distributes more than 600 food products: canned goods, dressings, desserts, beverages, dairy products, etc.
BGI acquired control of Willi-Food from the Williger brothers two years ago through its BSD subsidiary (formerly Emblaze) for NIS 268 million, three times the shares' market value.
At the top of the ownership chain is Israel 18 BV, a private company whose only operating asset is Willi-Food. Israel 18 is currently owned by Gregory Gurtovoy, who acquired a controlling interest in the company in 2015 from Alexander Granovsky for an undisclosed sum.
Suspicions were aroused last year concerning deposits related to companies in the ownership chain. Furthermore, the Israel Securities Authority opened an investigation that led to the arrest of Gurtovoy on suspicion of money laundering, corporate fraud and breach of trust, false accounting, and more.
At the same time, Israel 18 and Gurtovoy were scheduled to pay an old debt to Emblaze founder Naftali Shani, but did not make the payment on time. Shani therefore took action to foreclose and take de facto control of BGI, claiming that ownership of 67.7% of the company's shares had passed to his ownership as collateral for the debt.
The parties came to a compromise agreement in May, which was given the force of a court ruling. The agreement was that if the amount of the debt was not paid to Shani within a stipulated time, control would pass to him. It was also stipulated that if the first sum was not paid, Adv. Shem Tov would take action to sell the shares or foreclose them by any possible means. The money was not paid, and the trustee and his firm began to look for purchasers for the shares.
The court petition states, "In recent days, a number of bids were received from potential buyers in one format or another. The bids differ from each other, but the emerging common denominator between them is that they will cover and pay the full debt to the petitioners (Naftali Shani, S. H.-V.), and it is also very certain that a surplus will be left from the payment to these claimants."
One of the reasons that the court petition was filed was concern that if the final date for the payment to Shani (today) passed, he would be able to sell the collateral shares for the amount of debt due to him, and would not attempt to maximize the proceeds from the sale. The petition states, "Its goal is to maximize the sale of the shares, while enhancing the proceeds obtained on behalf of all the parties."
The lawyers also write that the bidders who met with Shani "realized that it was preferable for them to wait until after the dates for payment of the proceeds, when they would be able to obtain the shares at a lower price."
Up to $13.7 million
The bids in question include a bid by Kopelowitz and Labkowski, who signed an agreement with Israel 18 for the purchase of the trusteeship shares and additional shares held by it. Under this agreement, the investors and Israel 18 will establish a joint company, in which the investors will hold a 51% stake and Israel 18 49%. All of Israel 18's holdings will be transferred to this company for $12 million, $9.6 million of which will pay the debt to Shani and $2 million of which will pay the debt to the Fortissimo Capital fund.
The agreement includes an option for the sale of the other 49% of the joint company for $8 million. As proof that their offer was serious, the investors transferred $2 million to Adv. Lipa Meir's trusteeship account.
A second bid was made last week by Zvi Williger, who offered to purchase all the trusteeship shares in BGI and BSD (10% of the capital; Williger already has a holdin in BSD, as does his brother Joseph).
Williger, whose bid mentions the report in "Globes" last week about the contacts for the sale of control in BGI to Naaman for $12 million, is offering to pay $13.5 million, of which $9.8 million in cash will be used to pay the debt to Shani. Williger adds that he is willing to provide a bank guarantee amounting to 15% of the bid, and that if a better bid is made, he will ask that a pricing procedure be held.
A third bid, also made last week, is by a group of investors represented by Gross. He is bidding $13.7 million for the trusteeship shares in BGI and BSD, and is also willing to take part in a pricing procedure.
Taaman's bid, reported in "Globes" last Tuesday, is to purchase the trusteeship shares in BGI and BSD for $12 million as part of a larger deal in which Naaman will buy all of Israel 18's shares in BGI and BSD. Taaman has deposited NIS 4.5 million with the trustees in order to demonstrate its serious intentions, and is asking for a 60-day extension for the purposes of conducting due diligence for the companies.
According to Taaman's lawyer, Adv. Jacob Amster, one of Taaman's reasons for the proposed deal, given its retail food business, is "to create a commercial concern that will bolster competition in the food industry, which is too highly concentrated in a few large and strong companies, resulting in the prevention of competition that would lower prices for the benefit of the Israeli consumer."
Taaman adds that a merger between it and Willi-Food will create a concern with NIS 500 million in annual sales, and that "this will constitute an efficient, lean, and united concern with a single sales, distribution, and marketing system serving the two companies operating synergetically in the haredi (ultra-Orthodox) market under the Taaman brand, and in the secular market under the Willi-Food brand," while retaining all the employees involved and preserving their rights.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2016
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