Electra Consumer Products (TASE: ELEK) CEO Zeev Kalimi was questioned yesterday at the Israel Securities Authority on suspicion of securities offenses, mainly insider trading.
The company today notified the Tel Aviv Stock Exchange (TASE) that Securities Authority investigators had raided its offices on Tuesday and seized documents. Informed sources say that no arrests have been made, but other parties are likely to be questioned. The company reported, "Zeev Kalimi was questioned at the Securities Authority, and returned to regular work without any restrictions."
The Electra Consumer share price rose 20% last week after the company signed a deal for the acquisition of Golan Telecom Ltd. The share has climbed 130% over the past year. The positive momentum in Electra Consumer's business has continued for several quarters, following a prolonged decline that caused the company heavy losses, culminating in an aggressive cost cutting plan. The company's revenue rose 11% to NIS 2.3 billion in the first nine months of 2016, and its profit jumped 150% to NIS 97 million.
Electra Consumer acquired a controlling interest in Golan Telecom for NIS 350 million. The company also holds the import franchises for Huawei and Sony telephones. Together with the Golan Telecom acquisition, Electra Consumer last week signed a 10-year network consolidation agreement with Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) at a cost of NIS 210 million a year.
Even if the Securities Authority investigation of Kalimi is discounted, Electra Consumer's entry into the telecommunications sector has thus far been quite lame. One day after the Golan Telecom acquisition, Gil Sharon, the designated candidate for Golan Telecom chairman, who owns 10% of the company, said, "Prices of NIS 30 including VAT are unreasonable," hinting that Golan Telecom plans to raise prices under its new ownership. Sharon's odd statement on Galaei Tzahal (Army Radio) led the regulator to begin an examination of whether this constituted a crude attempt to fix prices in the cellular market.
After being questioned under caution, Kalimi was released without restriction, allowing him to enter the company premises and do his management work. It is premature to say what will happen in the investigation, but informed sources said, "There is no big case here," adding that the fact that no restrictions were imposed on Kalimi after he was questioned and he was allowed to resume normal work indicate that there are no important suspicions against him.
In its investigations, the Security Authority, if it does not arrest the suspects, is authorized to impose various restrictions on them, including house arrest, exclusion from the workplace, a ban on contacts with others involved in the affair, witnesses, or suspects, requiring them to deposit their passports, a ban on leaving Israel, etc. In Kalimi's case, no such restrictions were imposed.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 12, 2017
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