Businessman Gad Zeevi is to sell his holdings in Transclal Trade due to financial difficulties in the last year and heavy bank debts. The Zeevi Group took loans from the banks to finance its acquisition of a 20% stake in state-owned phone company Bezeq (TASE: BEZQ ) from Cable & Wireless (LSE:CW). The group is currently negotiating repayment with the banks.
Zeevi is selling his 39% stake in Transclal to the other controlling shareholders Polar Investments and Transclal CEO Mordechai Friedman.
The buyers are acquiring equal parts from Zeevi, and each will pay NIS 12.7 million. The deal will generate NIS 25.4 million for Zeevi, based on a NIS 65 million company value, compared with its NIS 63.8 million market cap. Once the deal is completed, Polar and Friedman are to each own 44.3% in Transclal.
Transclal's 2000 financial reports show that Bank Hapoalim has a lien on Zeevi's shares. The proceeds from the deal are thus expected to go to the bank, repayment for Zeevi's debt.
Due to the Zeevi's urgent need to raise cash, he is forced to sell the shares at a relatively low price after Transclal deteriorated by 25% over the last three months.