The controlling shareholders of Israel Petrochemical Enterprises (TASE: PTCH) David Federman; Gima Investments, controlled by Israel Petrochemical Enterprises chairman Jacob Gottenstein; and Alex Pesel have recruited a powerful partner for the controlling interest: the Menatep group, owned by billionaires Leonid Nevzlin, Vladimir Dubov, and Mikhail Brudno.
The trio, who are among the owners of Russian fuel company Yukos (RTS:YUKO), now live in Israel, after having fled Russia where they were accused of tax evasion. The three claim that they were victims of political persecution.
Menatep is set to acquire 26% of privately held Modgal Industries, which owns 57% of Israel Petrochemical.
Israel Petrochemical's market cap was $230 million as of this morning. The share has risen 175% since early 2004.
Although the stock exchange announcement did not disclose financial details, it is believed that the deal with Menatap reflects a value of over $250 million for Israel Petrochemical.
According to the announcement, Menatap will buy 20% of Modgal Industries. The shares are currently held by Plastiche, part of the Belgium's Ravago group. At the same time, Modgal Industries will sell 7.5% of the shares it holds, so that in all, Menatap will close the deal with 26%
The deal includes several other agreements, including an loan agreement in which Menatap will grant to Israel Petrochemical controlling shareholders Federman and Gima Investments, to replace a current loan from Bank Hapoalim (LSE:BKHD; TASE:POLI). A few weeks ago,Bank Hapoalim, which had funded the owners' purchase of control in Israel Petrochemicals, reportedly refused to allow Menatap entry into the company.
Presumably, the bank's refusal was related to the police investigation of its HaYarkon Street branch on suspicions of a multimillion dollar money laundering operation. (The trio apparently have no connection to the affair).
The result: Upon deal-close, Menatap will grant Federman and Gima a loan in the amount of tens of millions of dollars, which will be used to repay the existing Bank Hapoalim loan. The liens on owners' assets, currently granted to the bank, will be revoked. The assets include control of Modgal Industries, or over 50.1% of Israel Petrochemical share capital.
Published by Globes [online], Israel business news - www.globes.co.il - on Sunday, March 20, 2005