BGI Investments (1961) Ltd. (TASE: BGI), which produces Bagir suits, has submitted an offer to acquire the debt of Habas HZ Investments Ltd. (TASE: HABS), following the proposal to acquire the debt by Aspen Group Ltd. (TASE:ASGR).
Aspen Group, controlled by Rony Zarom, a high-tech millionaire who has turned to investing in income-producing real estate, made a bid to acquire control of Habas from Herzel Habas as part of a debt settlement that includes a 40% write-off on the adjusted debt, but also gives Habas's bondholders a large stake in the company and the possibility of a future upside.
Overnight, BGI notified the TASE that it was making a new offer for Habas, which purports to be better than Aspen's offer. BGI promises to invest NIS 72 million in Habas (compared with Aspen's offer of NIS 70 million), in exchange for 54% of the company (compared with 56% in Aspen's offer). Habas's debt will be converted into a 46% equity stake (compared with Aspen's offer of 44%), and two new bond series of NIS 108 million each will be issued (compared with Aspen's offer of NIS 100 million).
Habas's minimum value under BGI's offer will be NIS 118 million, compared with a value of NIS 100 million in Aspen's offer.
Habas became insolvent due to its leveraged acquisition of 21% of Dutch REIT Nieuwe Steen Investments NV (NSI) (AEX:NISTI) for NIS 800 million, just before the market crisis. The sharp drop in value of the investment and the deterioration in NSI's business resulted in financial difficulty at Habas, rendering it unable to meet payments on its NIS 450 million bond debt.
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013