June 4, 2012
Alon Holdings Blue Square - Israel Ltd. (hereinafter: "Alon Holdings") announced today that it had been informed by its 78.22% held subsidiary, Blue Square Real Estate (herein, "BSRE") of the closing on
, 2012 of the purchase agreements entered into on
June 3, 2010
, by and among Blue Square Real Estate, Gindi Investments 1 Ltd. and an additional entity controlled by
Moshe and Yigal Gindi
(together with Gindi Investments 1 Ltd., "Gindi"), as purchasers (through two subsidiaries owned 50% by BSRE and 50% by Gindi) (the "Purchasers"), and the municipality of
and the Wholesale Market for Agricultural Produce in Tel Aviv Company Ltd. (the "Wholesale Market Company"), as sellers (the "Sellers"), of rights to a long term lease of property, for a period ending
August 31, 2099
, in the wholesale market site in
At closing, the Purchasers paid the Sellers the balance of the consideration (the "Balance of Consideration"), in the aggregate amount of approximately
NIS 730 million
plus VAT. In addition to the Balance of Consideration, the Sellers may be entitled to additional consideration calculated as a percentage of the sale price of apartments that are sold in the apartment buildings complex (the "additional consideration"), according to terms stipulated in the agreements. As of the date hereof, no obligation for the Additional Consideration had arisen, and BSRE is unable to estimate at this stage whether any such entitlement to Additional Consideration will arise and the amount of the Additional Consideration, if any.
In order to pay the Balance of Consideration, the Purchasers received loans (the "Loan") from Bank Hapoalim (the "Bank") in the aggregate principal amount of
NIS 730 million
. The term of the Loan is 18 months and interest is payable quarterly at an annual rate of PRIME + 2% (total current annual rate of 6%). The loan agreement grants the Bank the right to demand immediate repayment of the loan in case Alon Holdings' ownership or holding in BSRE or BSRE's holdings in the subsidiaries which hold the Purchasers drops below 51% and in other customary circumstances.
In addition to this loan, the Bank provided the Purchasers with an additional loan in the principal amount of
NIS 120 million
to pay the VAT on the Balance of Consideration. The term of this loan is two months and bears interest at an annual rate of PRIME + 2% (total current annual rate of 6%). BSRE estimates that the Purchasers will repay the principal of this loan upon receipt of the VAT refund from the Israeli Tax Authorities.
Purchasers received possession of the land, and mortgages have been registered on the Sellers' rights in favor of the Bank. In addition, to secure the repayment of the Loan, the Purchasers and the shareholders of the Purchasers (BSRE and Gindi on a 50/50 basis) provided other collateral and commitments according to the terms of the loan, including but not limited to, a grant to the Bank of an unlimited guarantee by all shareholders of the Purchasers, a lien on all the assets of the Purchasers and a lien on all the shareholdings of the controlling shareholders in the Purchasers.