Troubles continue to dog the Peled-Givony group. The Tel Aviv-listed Computer Direct group today said it is pulling out of an agreement to sell a 2.7% stake in Formula Systems (Nasdaq:FORTY) to Iscal, a member of the Peled-Givony group.
Computer Direct's grounds for pulling out are that Iscal defaulted on payments, it said.
Iscal, which is also listed on the Tel Aviv Stock Exchange, has so far paid Computer Direct NIS 8.7 million, but it never received so much as one Formula share.
Under the original agreement, Iscal was supposed to buy 2.7% of Formula's equity from Computer Direct for $23 per share, totaling $6.4 million. The money was to have been paid in one of two ways: immediately as a single lump sum, or and this is what Iscal chose in11 weekly installments of $200,000 apiece, plus a lump sum of $1.1 million that Iscal handed over on signature.
The agreement further stipulated that if Iscal missed payments, Computer Direct would keep the downpayment and the money it had received up to that time. The companies also agreed not to sue one another.
Computer Direct undertook to rescind its claims against the Peled-Givony group, which have resulted in two lawsuits so far.
The agreement was designed to compensate Computer Direct for damage incurred by acquiring in Formula stock. Computer Direct had bought 6.2% of Formula's equity for NIS 75 million, and wrote down the value of its holdings by NIS 21 million in 2001. At least some comfort may be had in the thought that it has received NIS 8.7 million so far, from Iscal, and handed over nothing in return.