FIMI fund buys 42.2% of Kafrit Industries

First Israel Mezzanine Investors Fund (FIMI) will invest NIS 43.76 million in Kafrit Industries Ltd. (TASE:KAFR) to buy shares and for an allocation of new stock. When completed, FIMI will own 42.2% of the company. A deal was struck after lengthy negotiations between FIMI and Kibbutz Kfar Azza. �Globes� first reported about the talks six months ago

The deal was made at a price of NIS 4.97 per share for Kafrit, giving a company value of NIS 75 million. FIMI will inject NIS 28.76 million of its investment directly into the company, which will give it a value of NIS 103.8 million, after money. Final approval of this arrangement will be given when a number of conditions are met, including approval by Kafrit�s shareholders at a general meeting. FIMI and Kibbutz Kfar Azza have a six-week option to back out of the agreement.

The trigger for the deal with FIMI was Kafrit�s need for a cash injection caused by failed positions on derivatives made ten years ago. These cost the company NIS 20 million and also prevented it from concentrating on its core business. Over the years, the company tried to close its positions, and was able to reduce them, but was unable to obtain a one-time capital injection to close the failed foreign currency deals. The Israel Securities Authority asked for clarifications in this ongoing matter.

These positions harmed Kafrit�s profits. The financing costs caused the company a NIS 7.5 million loss for the third quarter of 2006, despite an operating profit of NIS 1.3 million.

Published by Globes [online], Israel business news - www.globes.co.il - on February 1, 2007