Maariv workers protesting at a Super-Sol store in Tel Aviv on Sunday.
Maariv workers protesting at a Super-Sol store in Tel Aviv on Sunday. Photo by David Bachar
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As the drama over the future of Maariv continues to unfold, with massive layoffs expected if the newspaper's sale goes through, the shareholders of IDB's Discount Investment, to which Maariv formally belongs, also stand to lose from the daily's dismal financial state.

About two weeks ago, a group of outside stockholders filed a shareholder derivative suit against the directors of Discount Investment, claiming that the investment in Maariv constituted a breach of duty on the part of the directors.

Shareholder derivative suits are a legal mechanism permitting owners of stock in a company to assert a claim on behalf of the company itself, and in the suit filed by the Discount Investment shareholders in Tel Aviv District Court, they provided a professional opinion by consultant Meir Amir asserting that the investment in Maariv was ill-conceived.

"[It was made] without in-depth financial consideration and without taking the destructive consequences that the investment would have on Discount Investment," the opinion claims. The IDB unit has owned the paper for barely 15 months and shareholders are expected to lose more than NIS 385 million collectively in the sale.

Meanwhile, about 200 Maariv employees demonstrated on Sunday on Tel Aviv's Ibn Gvirol Street in front of a branch of the Super-Sol supermarket chain, which is also an IDB group company, protesting their prospective firings. Police blocked the way of protesters who tried to enter the store.

Amir, who also provided expert advice in connection with legal action against the Tnuva dairy firm following last year's protests over the price of cottage cheese, agrees that the purchase of the newspaper was carried out without proper consideration of further long-term cash infusions that Discount Investment would have to make to keep the paper afloat, nor of the damage this would cause Discount Investment's reputation and market value.

Amir also said the acquisition of the ailing paper provided no boost for Discount Investment's other activities, and at the time of the actual acquisition of Maariv, the paper was actually worthless. Discount Investment declined to respond for this article.

"We don't see how Discount Investment will be able to recoup any portion of the approximately NIS 370 million that it has transferred to the newspaper directly or indirectly over the past 15 months," Amir states. "In addition, there are solid grounds to believe that the final figure for expenditures by Discount Investment in the Maariv deal will exceed this sum." He noted that the NIS 370 million sum is a conservative estimate.

Since the opinion was written, another NIS 15 million was pumped into the newspaper to cover last Friday's payment of August salaries for Maariv's employees. This would drive the estimated lost investment to NIS 385 million. Amir said that in 2010, when the paper was acquired, its sorry financial state was known. Maariv had negative capital equity of NIS 31 million and current liabilities of NIS 293 million, owed mostly to banks against current assets of just NIS 129 million, Amir said.