The Dovrat-Ofer group offered to invest $100 million in ECI Telecom (Nasdaq:ECIL), but the major shareholders in the company, Koor Industries and Clal Industries, did not want to be that deeply diluted.
The offer was confirmed yesterday by Clal Industries CEO Meir Shannie, who said it had been rejected at an early stage before the sides discussed what stake in ECI the Dovrat-Ofer consortium would receive.
Shannie disclosed that ECI and the Dovrat-Ofer consortium are working on a compromise agreement according to which Dovrat-Ofer would invest $50 million in the company.
The agreement between the two sides does not include an option for the Dovrat-Ofer consortium to increase its holding in ECI, and has a clause stipulating that they would not be able to sell their holdings in the company for at least a year after the signing of a contract between the parties.
The Dovrat-Ofer consortium is composed of Aharon Dovrat and his son Shlomo together with the Ofer brothers.The investment in ECI will probably be made via Isal Amlat Investments and the Carmel venture capital fund, both of which are controlled by the Dovrat family, and Ofer Technologies, which is controlled by the Ofer brothers.
Koor Industries holds a 34.69% stake in ECI. The $100 million investment would have diluted its holding to 26%.
Shannie said that the aim of ECI Telecom's board of directors was to get Shlomo Dovrat more involved in the company. Dovrat has served on the company's board for the last year and is a candidate for the position of deputy chairman in a part-time role.
But sources close to Koor are criticizing the move, saying that it is not clear what Dovrat could contribute to the company as deputy chairman that he couldn't as a director.