After months of exhausting negotiations, Hagi Brenner, the judge of the Tel Aviv District Court, yesterday approved the debt settlement with the bondholders of the petrochemical plants, thus paving the way for them to acquire control of the refineries. The judge preferred the debt settlement to the liquidation of the company.
The deal will be done through the purchase of the Israel Company’s share (16.7%) in the refineries by the petrochemical plants for NIS 554 million. The arrangement was signed with the owners of four series of bonds issued by the company.
It states that instead of a debt of NIS 1.65 billion, approximately NIS 1 billion will be written off, and instead a new series of bonds will be issued in the amount of NIS 485 million. In addition, the debt holders will be allocated 42% of the shares of the new petrochemical company and options that can be converted into shares of the company, under preferential conditions.
As part of the settlement, it was determined that the controlling owners of the petrochemical plants, headed by David Federman, Yaakov Gutstein and Alex Psal, will transfer NIS 100 million to the company (through the Green Alaska company). The controlling owners of petrochemicals will be allocated 36% of the shares in the new petrochemicals company.
The arrangement in its current form was opposed by several shareholders, led by Roni Hellman – one of the former controlling owners of Hellman Aldobi, which is owned by Phoenix and a shareholder in Petrochemicals. In the end, it was agreed that the shareholders would be able to sue the controlling owners of petrochemicals according to a precedent set in the past in the debt settlement of the Industrial Development Bank.
Another objection that was rejected was from the Union of Cities, which claimed that the sale of the refineries to an energy company and not to a real estate company (like the Hajjaj brothers) is contrary to the government’s decision to evacuate the petrochemical industry from the Gulf. Completing the deal significantly reduces the chances of this happening.
This decision was made on the recommendation of Dr. Avi Simhon, Netanyahu’s former economic advisor. He recommended the evacuation of the petrochemical industry from the Gulf region and the construction of housing complexes in the washed-out areas.
The controlling owner of the refineries Idan Ofer decided not to take the risk. He sold his holdings in the company (through the Israel Company) to the petrochemical plants, which held the right of refusal on the shares. Initially, the possibility of selling the shares to the Hajj brothers was considered.