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Goldsteins to pocket NIS 90 million from Iscal-Formula deal

Iscal Holdings' acquisition of a stake in Formula Systems (Nasdaq:FORTY) (FORTY) will generate Formula Chairman and CEO Dan Goldstein and President Gad Goldstein NIS 90 million capital gains. Tel Aviv-traded Iscal today announced cancellation of an agreement signed in August 2001 with the Goldstein brothers.

Iscal said that in return for the $25 million already transferred to the Goldsteins, Iscal will receive 3.5% Formula shares and 2% Formula Vision shares, today worth just NIS 21 million. In other words, the Goldsteins are selling Iscal shares worth NIS 21 million for NIS 110 million.

Iscal's commitment to issue $43 million in bonds to the Goldsteins for 10.7% in Formula, and 5.8% in Formula Vision, was cancelled.

Dan Goldstein offered the following explanation for Iscal's agreement to pay so far above market for its Formula stake. Although Iscal paid more for the shares, the Goldsteins freed Iscal of a $43 million commitment. He added that Iscal can now acquire Formula shares on the market for 65% less than their value when the original agreement was signed.

Goldstein estimates that Iscal will acquire Formula shares through a purchase offer. When Iscal reaches 22.5% in Formula, the parties will be able to sign a joint-control agreement. He said that from Iscal's perspective, the deal was apparently the right thing. The new agreement allows Iscal to attain the same stake through averaging prices, Goldstein added.

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