Businessman Eli Azur last week petitioned the Jerusalem District Court to declare him the owner of “The Jerusalem Post”. Azur's claim states that he plans to sue CanWest Global Communications (NYSE: CWG; TSX: CGS) for damages, and that CanWest has slandered him, and damaged his business, property, and reputation.
Azur asserts that CanWest’s media campaign against Mirkaei Tikshoret Ltd., controlled by Azur, when “The Jerusalem Post” was acquired, and CanWest’s petition for arbitration and a temporary restraining order, have caused him a great deal of public damage. He alleges that his reputation has been tarnished, and doubt cast on his rights as a shareholder in “The Jerusalem Post”.
These actions are allegedly making it difficult for Azur to raise the financing that the Jerusalem Post group needs, because potential investors are unwilling to invest in the group before it is made clear that that Azur owns the rights to the shares, and is free to use them as he sees fit.
The court petition is another stage in the dispute between Azur and the Asper family, which controls Canadian company CanWest. With a market cap of $5 billion, CanWest is the largest communications company in Canada, with dozens of newspapers, radio and television stations, and Internet business.
The claim describes the course of negotiations and relations between Azur and Mirkaei Tikshoret on the one hand, and CanWest on the other. The parties planned to buy “The Jerusalem Post”. Mirkaei Tikshoret and CanWest signed a letter of intent in mid-2004, declaring their intention to jointly buy the shares in “The Jerusalem Post” from Hollinger International Inc. (NYSE: HLR).
According to Azur, the principles of the agreement were changed, and the parties signed a letter in November 2004, which stated that Mirkaei Tikshoret would purchase the shares and other rights in “The Jerusalem Post” by itself.
Azur asserts that the parties continued their negotiations after this letter was signed, with the aim of reaching an arrangement for the sale of the newspaper’s assets. Mirkaei Tikshoret eventually paid $13.2 million for “The Jerusalem Post”.
Azur says that he alone paid for the purchase of the newspaper, and virtually all the proceeds were paid for an assignment of the newspaper’s $40 million debt to Hollinger, from Hollinger to Mirkaei Tikshoret. Azur alleges that Mirkaei Tikshoret actually bought from Hollinger the right to become a $40 million creditor of “The Jerusalem Post”. His claim states that only $999 was paid for the shares.
The claim states that in mid-December 2004, after presenting approval from the Antitrust Authority director general, CanWest refused to help finance the deal, and that Azur therefore paid the entire sum of the purchase.
Mirkaei Tikshoret financed the deal with a loan from Bank Leumi. Azur was a personal guarantor for the sum paid to Hollinger. Azur also asserts that the information about the sale of the shares was communicated to Hollinger, which raised no object to the sale of the shares.
The parties continued their negotiations in early January 2005, but following an ultimatum by CanWest representatives, negotiations broke up, and CanWest’s representatives left Israel. Later in January, CanWest initiated an arbitration proceeding in the matter against Mirkaei Tikshoret in a New York court.
In the arbitration proceeding, CanWest is demanding 50% of the shares in “The Jerusalem Post”, and half of the additional rights acquired by Mirkaei Tikshoret. Azur is asking the court to declare that he is the owner of the shares, which he purchased, and that no one else has any rights to the shares.
Published by Globes [online], Israel business news - www.globes.co.il - on Sunday, February 13, 2005