Trustees of Israel's Maariv daily seeking additional bidders to buy ailing newspaper
Following deal to sell paper, Tel Aviv District Court opens acquisition of all or part of the newspaper group to other potential bidders.
Although Nochi Dankner's IDB group, which currently controls the Maariv newspaper, struck a deal last month with Shlomo Ben-Zvi to purchase the daily, the Tel Aviv District Court is now opening acquisition of all or part of the newspaper group to other potential bidders.
After IDB came to an agreement to sell Maariv to Ben-Zvi, with the expected layoffs of all but about 300 of the paper's roughly 2,000 employees, the newspaper group filed for a stay of proceedings from creditors, which was granted last week for a one-month period by Tel Aviv District Court Judge Varda Alshech. The judge appointed trustees to oversee the paper's daily operations and now, at the trustees' request, Alshech has issued an order inviting investors to bid on the purchase of Maariv shares or a portion of the company's assets or operations.
Maariv's request for a stay of proceedings last month came at a time when it was facing about NIS 400 million in debt, including about NIS 95 million owed to employees, NIS 55 million to banks, NIS 67 million to bondholders and NIS 126 million to its parent firm, IDB's Discount Investment Corp. According to a filing with the Tel Aviv Stock Exchange, the deal with Ben-Zvi would call for Maariv to sell him all of its intangible assets for an immediate sum of about NIS 10 million, followed by future payments of as much as NIS 75 million.
Consent to open the process to other bidders came Saturday evening, and the trustees, Shlomo Nass and Yaron Arbel, have been instructed to publish a notice inviting bids in two newspapers by today. The trustees say they expect the move to generate bids with better conditions than those offered by Ben-Zvi, whose Hirsch Media also publishes the right-leaning daily Makor Rishon. Ben-Zvi, whose deal does not include Maariv's Bat Yam printing plant, has said that of the newspaper's current workforce of about 2,000, roughly 300 editorial and administrative staff will be rehired once he takes over ownership, but the printing and distribution staff are expected to lose their jobs once the Bat Yam plant is separately sold.
Sources close to Nass say he has already received several other offers to purchase Maariv from interested parties in Israel and abroad, but they have not yet reached the negotiation stage and it is unclear how serious they are. Nass is refusing to accept the sale to Ben-Zvi as a forgone conclusion and apparently believes the business is worth more than Ben-Zvi has offered.
Judge Alshech ordered an expedited bidding process for additional proposed purchase offers, giving potential bidders until October 9 to submit their offers, and also authorized the trustees to enter into negotiations with Ben-Zvi. It would be up to the bidders to investigate the current state of any assets of Maariv Holdings, the entity that formally owns the newspaper group, at the bidders' own expense. The paper has had huge losses since it was acquired by the IDB group about a year and a half ago.
The purchase of Maariv is subject to the court's approval as well as that of the antitrust commissioner. The court is also demanding that bidders come to an agreement with the newspaper's employees over their continued employment. Employees have staged a number of demonstrations since the announced sale to Ben-Zvi, expressing concern not only for their jobs but also that they would not receive full severance and pension benefits, and their salaries would remain unpaid. They have received their August wages, and on Sunday the trustees informed the workers by email that funding has been secured to pay September salaries, subject to court approval. The funding apparently does not involve any further injection of funds from the IDB group.
The trustees' notice to the employees made no reference to the proposed sale of Maariv to Ben-Zvi. In their email to the paper's employees, the trustees asked that the employees continue with business as usual at Maariv. "We understand the concerns, pain and frustration you have been experiencing for some time and the tough challenges you were facing prior to the stay of proceedings," they wrote. The trustees asked the staff to pitch in to prove that Maariv can be brought back to financial health, calling the paper "one of the State of Israel's media mainstays."
Nass and Arbel also promised the employees that they, the trustees, would work to resolve the problem of payment of benefits owed the workers.
In a separate statement on the possible sale of the paper, the trustees warned that Maariv becomes less attractive to potential buyers as time goes by.
Because they were just appointed a week ago, on September 23, Nass and Arbel say they have not had an opportunity to fully examine the particulars of the proposed sale of the newspaper to Ben-Zvi. "Examining the nature of the deal and alternatives requires additional bids for the acquisition of the shares [of the Maariv group] and its operations and assets, or a portion of them," the trustees stated.