Holding company Discount Investment, controlled by Eduardo Elsztain's IDB Development, has started to act on its plan to raise cash through asset sales. Last Thursday, via the stock exchange and in off-floor transactions, Discount Investment sold 12% of Property and Building Ltd. (TASE: PTBL) for a total of NIS 129 million. The sale was at a discount of 4% on Property and Building's closing price on Wednesday. The sale reduced Discount Investment's stake in property and Building to 64.44%. The holding company will record an increase of NIS 13 million in its shareholders' equity in its second quarter financials as a result.
Discount Investment may well sell a further 10-20% of its stake in Property and Building to amass more cash while retaining control of the subsidiary. Alternatively, Discount Investment could consider selling its entire 50.32% holding in high tech investment company Elron Electronic Industries Ltd. (TASE: ELRN), which has a market cap of NIS 500 million and which is not part of the group's core business.
Discount Investment owes NIS 4.33 billion to its bondholders and lending banks, on which it will have to pay NIS 1.05 billion interest. At the end of the first quarter it had NIS 637 million cash. By the end of this year, it will have to make debt payments of NIS 467 million, and in 2017 it will face repayments totaling NIS 1.03 billion.
Discount Investment has also announced that it will grant acting CEO Sholem (Saul) Lapidot, who has a 75% post, 5.31 million options on its shares, representing 4.97% of its capital after their issue. The options will mature in five equal annual portions between January 2017 and January 2021, and their strike price will rise by NIS 1 a year. Thus, if the strike price is NIS 9.50 in January 2017 (close to today's share price), in January 2021 it will be NIS 12.50. Discount Investment states that the fair value of the entire options package is NIS 22.6 million, so that the average annual value of the benefit is NIS 4.5 million.
The Discount Investment board also granted the company's new CFO Gil Kotler 621,000 options, representing 0.58% of the company's capital. Kotler's options too will mature over five years, but they were issued with a strike price of NIS 7.45, putting them deeply in the money already.
Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2016
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