Two weeks after BGI Investments (1961) Ltd. (TASE: BGI) bondholders were surprised to learn that controlling shareholder Zvi Barenboim had sold the company to a mysterious billionaire named Alexander Granovsky, they got the chance on Sunday to meet him. The Ukranian-Jewish businessman tried to calm the bondholders, telling them that he had been looking for an Israeli company for five years.
Standing next him was the Chief Rabbi of Odessa, Rabbi Avraham Wolff, who was appointed BGI's new chairman. Its new CEO is Israel Yossef Schneorson. The meeting was held in the offices of Adv. Israel Shimonov, Granovsky's representative. A meeting of bondholders and a group of rabbis is unusual. The word "faith" was the motif that the new controlling shareholder and his management team kept on repeating.
The meeting was held in Hebrew and Russian, with Rabbi Wolff translating for Granovsky the questions by the institutional bondholders' representative Adv. Guy Gissin, who tried to understand the character of the mysterious investor. "Overnight, our controlling shareholder disappeared in a big deal, which creates some discomfort," said Gissin. "We don’t know the new controlling shareholders, and we don’t know his friends. We have to rely on the fact that the deals planned by the company in the US will be with people who are not his friends."
Shimonov, who managed the meeting, said that so long as there are bonds in circulation (BGI owes its bondholders NIS 145 million), there is no intention to distribute a dividend, stressing that the bondholders had no reason to worry. As for the nature of the planned investments, he said, "They will of a kind that will enable the company to meet its bond payments in full and on time." He believes that, although BGI's new controlling shareholder is a charity, the company will be run as a business for all intents and purposes.
Granovsky said, "I am very pleased that you want to get to know me, to see that I am not an abstraction, but a real businessman. For me, a public company in Israel is something completely new. We want to continue learning Israel's laws, and we will do this in a way that will please everyone. Every deal will be made after thorough review, and no shekel will be spent without such a review."
Granovsky added, "We did not come here for one day, but to establish a great and good company that will have good assets and generate profits. There will be investments, but no specific decision has been made yet. Every proposal for investment will be brought before the board of directors for a decision, and only if it is good for the bondholders and shareholders will it be made. The profits will go to charity, which is why it is important to me that this is done right."
Boris Schneidman of Migdal Capital Markets asked Granovsky in Russian about his experience and plans. Granovsky replied, "This is my first public company. I have many private businesses, and I don’t have to give you any capital statements. I have extensive business experience in the US and elsewhere in the world."
Schneidman: What does BGI have that led you to choose it?
Granovsky: "Five years ago, I visited Kfar Chabad of the Lubavitcher Rebbe, where I saw that he had said that the best investment was in Israel, and that is what I am doing. I always dreamed about this."
Two weeks ago, Barenboim sold the controlling interest in ZBI Ltd. (TASE: ZBI-L), which controls BGI, to a charity, Chabad 770 BV, a Dutch-registered charity controlled by Granovsky, for NIS 128 million. As part of the deal, Barenboim gave Granovsky an option to sell back to him a NIS 72 million credit portfolio managed by a BGI subsidiary.
In a press release, Chabad 770 said, "The foundation's profits are intended for charitable purposes and Jewish institutions worldwide." It added that ZBI intended to mainly invest in real estate and commercial property in the US. ZBI's only current asset is BGI, which has NIS 250 million in cash reserves generated from sales of assets by Barenboim just before the market crisis of 2008, as well as the acquisition of Industrial Development Bank at a bargain price which it recently sold to Menorah Mivtachim Holdings Ltd. (TASE: MORA).
Granovsky's business interests include real estate, hotels, banks, construction materials and raw materials for industry. Throughout the meeting Shimonov tried to calm the bondholders' concerns, concluding, "Granovsky has contributed huge sums to the Jewish people around the world, and I hope that he will not regret it. The company will survive on the basis of his longstanding faith after the bonds are repaid."
Published by Globes [online], Israel business news - www.globes-online.com - on September 11, 2012
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