Israel Petrochemical Enterprises Ltd. (TASE:PTCH) denies that a power struggle is developing in subsidiary Scailex Corp. ltd. (TASE: SCIX; Bulletin Board:SCIXF), which owns 15.8% of Oil Refineries Ltd. (TASE:ORL), between Petrochemical Enterprises and two companies controlled by Ilan Ben-Dov, Tao Tsuot Ltd. (TASE: TAO-M) and Suny Electronics Ltd. (TASE: SUNY).
Petrochemical Enterprises owns 50.1% of Scailex, Tao Tsuot owns 23.5% and Suny owns 12.8%. Sources close to Petrochemical Enterprises' shareholders said today that there were no negotiations for the sale of shares in Scailex to Ben-Dov. A source said, "We have no intention of selling the Scailex stake to Ben-Dov or anyone else. The shares are not for sale," said a source.
The source added that Petrochemical Enterprises did not rule out buying Tao and/or Suny's stake in Scailex. He said, "We're not buying Ben-Dov's stake at the moment, but it's definitely an option in the future."
Sources say that relations between Petrochemical Enterprises' controlling shareholders - David Federman and chairman Jacob Gottenstein, through Modgal Industries Ltd. - and Ben-David worsened because in the delay in granting Petrochemical Enterprises' control permit for Oil Refineries, after the Israeli government rejected the standing of Menatep Group, owned by Russian oligarch Leonid Nevzlin, which owns 26% of Modgal.
The delay in granting the control permit is reflected in Petrochemical Enterprises' share, which has lost a third of its value since the beginning of the year. Sources say that Ben-Dov, who had anticipated an upside in Scailex, is displeased.
Sources inform ''Globes'' that Ben-Dov and Petrochemical Enterprises recently discussed delisting Scailex and allocating Petrochemical Enterprises' shares to Ben-Dov's companies, but that the parties could not agree on a company value for the deal because of the fall in Petrochemical Enterprises' market cap. The parties also discussed allocating 15% of Scailex to Ben-Dov's companies, and that the shares would be sold back to Petrochemical Enterprises once the control permit for Oil Refineries was obtained.
The dispute led Ben-Dov to threaten to dismantle his partnership in Scailex by selling Tao and Suny's shares to a third party or by buying Petrochemical Enterprises' stake. Capital market sources said that Ben-Dov has held initial contacts with Israel Corp. (TASE: ILCO), which owns 45% of Oil Refineries. Meanwhile, Suny said in a notice to the TASE last week that it would hold a NIS 500 million bond issue, the proceeds of which might finance the purchase of Petrochemical Enterprises' stake in Scailex.
Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2008
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