Tshuva didn't invest in Dankner Investment, he lent the Dankners $2.25m - TheStreet

Dankner Investment said it sold 4.9% of its shares to tycoon Yitzhak Tshuva. But a more accurate depiction of the deal would be that Tshuva lent the Dankner famliy $2.25 million, and received an option to buy 2.5% of Dankner Investment (TASE:DKNR), according to accountants.

The option grants Tshuva the right to buy at NIS 20.2 per share, compared with the hare's opening price Tuesday of NIS 12.8.

Dankner Investment advised the Tel Aviv Stock Exchange of the transaction ten days ago, representing the deal as selling 4.9% of its shareholders capital for $4.4 million. The deal, the company said, will take place in two stages: 2.5% of the company would be sold for $2.25 million, and the rest would take place in May 2003 a 2.15% stake would change hands for $2.15 million.

But the very announcement itself explained that Tshuva received a put option, enabling him to resell the shares back to the Dankners for the same price he paid. Moreover, Tshuva would get interest for the period until May 2003. moreover, if Tshuva decided to exercise the put option, he would not have to carry out the second part of the deal.

A buyback transaction of that kind is not defined as a sale transaction. Accountants TheMarker questioned agree that the transaction cannot be booked as a sale, or serve to indicate the real value of the companies involved.

From the buyer - Tshuva's - perspective, the whole thing amounts to a loan in exchange for interest, as well as an option to buy Dankner Investment shares in another nine months an option he will surely only exercise if Dankner Investment stock rises considerably. The share's price today is a hefty 40% below the price stipulated in the option.

The Dankners' reasons to make the deal are not obvious. Family sources have been saying that they want to reduce family holdings in their companies from 90%, to 80% or 75%. But, as said, the deal with Tshuva is not a sale it is a short-term loan.

Market sources surmised that the Dankners' objective may have been to whip up interest in Dankner Investment shares, as the family could use more cash now to carry out its regular business.