The holders of the four series of the company’s bonds had previously approved the arrangement, which involves a haircut of about one billion shekels. Petrochemical wants to acquire control of Bezan while exercising a right of refusal granted to it by virtue of an agreement, on the sale of the company’s shares to Israel in Bezan (16.7%) to the Tzachi brothers and Ido Hag C for NIS 550 million.
Judge Brenner made it clear at the hearing to the representatives of the Association of Haifa Gulf Cities, who opposed the approval of the deal, that the Economic Court is not the place where they are supposed to present their claims, and told them “You are not in the right court. The rejection of the settlement will cause hundreds of millions of shekels in damage to the debt holders who hold the bonds . Do you want to provide compensation for such a thing?” However, the obstacles still facing the petrochemicals on the way to renewed and exclusive control of Bezan are not eliminated. First and foremost, the Hajj brothers who will not easily give up the deal they conceived and executed in February of this year, to acquire control of Bezan from the hands of Idan Ofer, Mainly with a real estate intention, although also with a plan to heal Bazen as an operating company. A few weeks ago, the brothers claimed in a letter to Petrochemicals that the company did not meet several obligations it had to bear, mainly on a technical level, such as a statement on the amount of cash in the company treasury. It will be interesting to see how the brothers will deal with the dilemma of fighting in an arrangement that includes most of the large institutional bodies, with the consequences of a confrontation with them.
A second obstacle is the disbursement of NIS 100 million by September 9, that is, at the end of the week. The amount is supposed to be paid by the current controlling owners and their partners in the settlement (50%) Eder Schwartz, Ohad Schwartz (both sons-in-law of Benny Steinmetz), Michael Bobrov who is the representative of Trafigora in Israel and its operations manager, and Yona Vogel, former CEO of Paz. The group has already deposited 10 million shekels in trust for the bond holders and if you do not transfer the remaining 90 million shekels, this amount will be forfeited.
A third obstacle is the raising of NIS 485 million in a new series of bonds instead of a debt of NIS 1.25 billion to the holders of three series of bonds, with the fourth converting its debt into 8% of the shares in Zen that are pledged to it. The institutional tender will be held the day after tomorrow, Thursday. This is a series with an interest rate of about 7%, with a final maturity until 2027 where the principal is paid at the end of the period in April 2024 and to which shares in ZEN worth a billion shekels are pledged, so it seems that the raising will end positively.
A fourth obstacle to completing the deal concerns the new group that comes under control. that of Steinmetz’s sons-in-law. Petrochemical received the renewed permit relatively easily, despite the environmental organizations’ struggle with the settlement. The Ministry of Finance, when it comes to grant the permit, will examine fundamental questions such as the source of Green Oil’s capital, and especially the question of whether Benny Steinmetz is behind this capital, at the same time as the bribery suspicions against him in the world. Steinmetz denied through his spokesman any connection to the financing of Green Oil and his fortune. As far as Federman is concerned, there is no fundamental problem here. In the event that the group does not receive a control permit, it will be able to put its share up for sale to a party that will receive control, and in this case Federman will have a new partner, but his control permit will remain in effect.
A significant obstacle that Federman faced were the environmental organizations. Ministers Avigdor Lieberman and Karin Elharer signed the renewed control permit for petrochemicals yesterday. Prime Minister Yair Lapid postponed the decision until after the court hearing. After the decision on the settlement was made, Petrochemicals sent a letter to Lapid, in a requested move, in which it informed Lapid for the first time that it would uphold its commitment and cooperate with all the relevant parties to implement Government Resolution 1231, according to which the polluting energy companies will be evicted from Haifa Bay in the coming decade. The statement, which Lapid was waiting for, would allow him to sign the permit, and he may have done so after the issue was closed.
Federman presents – the one billion shekel miracle: The current situation in which David Federman finds himself is almost a miracle. And even a double miracle. Until a few weeks ago, he and his family were part of a group of controlling owners, who only have control on paper, in a stock exchange body, since Petrochemical is an insolvent company that is unable to meet its huge obligations, amounting to NIS 1.65 billion, to the bondholders.
And here, yesterday, after the court approved the creditor arrangement proposed by Petrochemicals, Federman’s world suddenly changed: he and his partners in Petrochemicals, a company whose market value is only about NIS 4 million, are on their way to becoming the controlling owners of the refineries (Bazen) – a company whose market value is NIS 4.2 billion, after its stock jumped 54% this year. This while they are making a haircut of about a billion shekels on the debt of petrochemicals. This is a haircut that puts Federman and his partners in a club that includes figures such as Lev Leviev, Yitzhak Tshuva, Nochi Dankner and Eliezer Fishman, and somehow it slips under the radar of public attention and is received almost with equanimity.
How much will it cost Federman and his partners? Not much. The current controlling owners of Petrochemical will, together with new partners that include Benny Steinmetz’s sons-in-law, inject NIS 100 million into the company.
How did all this happen? Thanks to the perfect storm. Petrochemical calculated its end backwards, and its bondholders even financed its activities. And here came the Hajjaj brothers, who sought to buy the controlling shares from Idan Ofer’s Israel company, Petrochemical’s long-time partner in controlling Bezan, for NIS 550 million, turned the The spotlight on the real estate potential that lies in Bezan, boosted the stock (which also received a tailwind from the war between Russia and Ukraine that raised energy prices all over the world as well as the capital of the companies operating in this field) and whetted the appetite of petrochemicals to exercise their right to refuse the deal.
Only the petrochemicals did not have the necessary amount. The bondholders looked into ways to exercise the right of refusal and realized that due to the regulation there is no choice but to do so through the current controlling owners of Bezan. This is because the remaining control over Bezan, which the state grants since Bezen is an essential asset, is particularly broad, and is one that is personally granted not only to the company but Even for those who control it, after careful checks carried out by the state. Taking the owners of petrochemical control out of the picture and getting a new control permit is not impossible, but it takes a lot of time; time that none of the parties have, since the right of refusal must be exercised by September 15, another nine days, otherwise Ofer sells the controlling shares to Hajj.
And so Federman and his partners find themselves, de facto already disappeared from the business landscape and stopped supporting the insolvent company, once again in the center of things, with an asset worth billions and with almost full legitimacy from the institutions that manage the public’s savings, who will receive a big haircut, which may, in the future, justify itself . Maybe.