Leon Recanati
Leon Recanati Photo by Alon Ron
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Nir Keidar
Amnon Barzilay Photo by Nir Keidar

Four years after leading a group of investors to acquire the controlling interest in Gmul Investment at a generous company value of NIS 630 million, Leon Recanati took a giant step toward distancing himself from the most disastrous investment of his long career.

The tycoon, whose family once controlled the IDB and Delek groups, has already lost NIS 440 million in the venture that he bought from from Eyal Yona and Amnon Barzilay. Gmul invests mainly in residential and income-generating real estate in Israel, the United States and Turkey.

The company announced Tuesday that Recanati, through his privately-owned company Legov, sold 25.2% of the company's stock, representing half his 50.4% stake, along with a share in control to CPA Itzhak Gvilli for up to NIS 20 million. The price reflects Gmul's current NIS 21 million market cap without any control premium.

Under the agreement, Gvilli will pay NIS 6 million in the first stage through his company, Sagi Collateral. Of this amount, NIS 3.5 million will be paid on finalizing the deal, with the NIS 2.5 million balance payable either when Gmul's market value hits NIS 100 million or by September 2013 at the latest. Gmul, managed by Erez Bendel, has assets of about NIS 500 million listed on its balance sheet.

Gvilli also has the option to buy Recanati's remaining holdings in the company on terms similar to the first part of the deal.

Gvilli never drew much attention from capital market circles before, but he has recently been looking for a public platform. Earlier, he tried to negotiate a piece of Atia Group, a publicly-listed real estate company.

Insiders at Gmul said Gvilli intends to turn the company toward fields other than real estate, like alternative energy or oil and gas exploration, to generate cash flow, something the company currently lacks.

In 2009, Gmul became the first company to arrive at a debt arrangement with its bondholders. The deal, involving hundreds of millions of shekels of debt, slashed its liabilities to both bondholders and the banks from about NIS 800 million to about NIS 170 million.