Subscribe to Print Edition | Fri., August 15, 2008 Av 14, 5768 | | Israel Time: 02:48 (EST+7) web haaretz.com   Back to Homepage Rosner's Domain Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate Easy Start Travel Week's End Anglo File

Petrochemicals freed to join Oil Refineries owners By Yoram Gabison Israel Petrochemical Enterprises has removed another barrier to joining the group controlling Oil Refineries, says Eran Schwartz, chief executive of the polyethylene manufacturing company. The main obstacle had been businessman Leonid Nevzlin's participation in Petrochemical Enterprises' management. Advertisement But as the Government Companies Authority has confirmed, no legal impediment exists to Petrochemical Enterprises gaining a controlling interest in Oil Refineries as long as Alder, the group controlled by Nevzlin, exits the group controlling Petrochemical Enterprises. The Authority has ruled that Petrochemical Enterprises may buy a controlling interest in Oil Refineries only if the Alder group's holding in Petrochemical Enterprises is less than 5%. Petrochemical is controlled by engineering company Modgal. To remove the impediment, Modgal plans to buy out Alder's 25% stake in Modgal itself, and to acquire the subsidiary Alder Finance. Alder Finance's main asset is a loan it extended to Modgal to acquire a controlling interest in Petrochemical Enterprises. The deal will also involve Modgal giving Alder an option to buy up to 12% of Petrochemical Enterprises. Modgal will also receive an option to sell 14.75% of Petrochemical Enterprises, a stake worth about NIS 100 million based on Petrochemical's current market capitalization on the Tel Aviv Stock Exchange. Modgal will be entitled to cancel the options, in which case the Alder group would receive Modgal shares instead of shares in Petrochemical Enterprises, but fewer than it holds today. The upshot of the deal is that Alder will cease to be part of the group controlling Modgal and will become a financial (not strategic) investor in Petrochemical Enterprises. The Government Companies Authority's opposition to allowing Nevzlin to become a part, albeit an indirect one, in Oil Refineries' control wasn't the first hurdle to overcome. Previously the authority had objected to allowing the Swiss trading company Glencore to be part of the deal. Glencore had owned a 19% stake in PCH, a fully owned subsidiary of Petrochemical Enterprises that had been slated to take part in the Oil Refineries acquisition. Petrochemical Enterprises solved that by buying Glencore's shares in PCH for $57.2 million last March. Oil Refineries was privatized in early 2007. Israel Corporation, controlled by Sammy and Idan Ofer, had bought a 36.8% interest in the company, and PCH had bought 9.2% in January 2007, paying NIS 2.43 billion together. Because of the state's objection to PCH being part of the controlling group, it entered into an options agreement with Israel Corporation. Now, as said, the obstacles are being overcome. Bookmark to del.icio.us   Robbed in the war zone Two Haaretz journalists robbed by armed Russian troops in Georgian city of Gori. The Jewish Brad Pitt Hollywood star plays American-Jewish hillbilly in the latest Tarantino film.

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