Dispute holds up capital for UAV co Aeronautics
The dispute between Aeronautics's shareholders is mainly focused on who will inject the capital, how much, and at what valuation.
Aeronautics needs the capital injection immediately, but the differing interests of its shareholders - founders Avi Leumi and Moshe Caspi, Avi Shaked and his late brother Aharon, Viola Private Equity, Poalim Capital Markets - Investment Bank Ltd., and debt recycling funds KCPS & Co. Ltd. and Bereshit Fund - have so far blocked an agreement on how to inject the capital into the company.
The dispute between Aeronautics's shareholders is mainly focused on who will inject the capital, how much, and at what valuation. The main dispute is between the older shareholders and the two debt recycling funds, which invested in the company's last financing round. Last summer, KCPS and Bereshit invested $35 million in Aeronautics (about NIS 120 million at the exchange rate at the time) in equal shares. The investment was in two parts: each fund invested NIS 47 million in preferred shares, and NIS 13 million in a convertible loan.
According to financial market sources, rumors about Aeronautics's condition are overblown, and it is possible that there will soon be positive developments at the company.
Aeronautics said in response, "The company is unaware of any dispute between the shareholders. On the contrary, most shareholders recently injected substantial capital into the company."
As for the cash flow problems, the company said, "The scale of the company's business fell 10% in 2011. The company will report a loss for 2011, most of which is due to accounting write-offs and adjustments made on the acquisition of Controp and other companies. The company faced temporary cash flow problems in late 2011, which the shareholders covered. The company undertook extensive streamlining measures, and there has been substantial improvement in results in 2012."
Market sources believe that Aeronautics recently received an offer to purchase shares in the company. One source said, "The offer was amazing, but this is not the right time or right value for a sale of the company."
It is not known if this offer was only for the holdings of the debt recycling funds in Aeronautics, or for all the shareholders.
KCPS and Bereshit Fund invested in Aeronautics at a company value of $270 million (before money). The preferred shares, through a series of conditions, guarantee them a return of up to 15% a year, depending on various scenarios, in preference to Aeronautics's other shareholders. The convertible loan, linked to the Consumer Price Index (CPI), bears an 4.9% annual interest rate, and can be converted into equity at a company value of $300 million.
KCPS and Bereshit Fund are guaranteed a minimum return of 7.5%, CPI-linked, for four years. They received as collateral a first lien on 32% of Controp.
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
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