The deal for the sale of 50% of the Rehovot Mall has run into complications. The Shurka-Rabinovitch consortium that conducted negotiations to buy 50% of the mall from Nitsba Holdings (TASE:NTBA), plans to sue the Azorim Investment, Development and Construction (TASE:AZRM) board . Amot, which owns 50% of the mall, exercised its right of first refusal on Nitsba's share, bought it, and sold it to Azorim Properties for NIS 215 million.
During the negotiations that took place in December 2004 between Nitsba and the Shurka-Rabinovitch consortium for the sale of Nitsba's stake in the mall, Amot declared that it intended to exercise its right of first refusal, and then to sell the 50% stake to Azorim Properties.
According to sources close to the deal, Amot Investments intends to sell Azorim Properties its own stake in the mall too, so that Azorim Properties will have 100% ownership.
The Shurka-Rabivovitch consortium has announced that it intends to sue those involved in the deal, including the directors of Amot, for fraud and tort.
Yair Rabinovitch, who was formerly income tax commissioner, claims that the right of first refusal held by Amot is invalid, since, under the contract, it had a validity period of only five years.
Rabinovitch further claims that Amot is employing legal sophistry, making out that it is exercising the right of first refusal, when in fact the beneficiary is Azorim Properties.
According to Rabinovitch, in order to avoid paying purchase tax, Amot is presenting the sale deal as though Azorim Properties bought Nitsba's 50% stake in the mall from Nitsba, not from Amot. "It’s a matter of NIS 11 million purchase tax. This is an illegal transaction, and certainly not a legitimate one," he said.
Published by Globes [online], Israel business news - www.globes.co.il - on January 26, 2005