The 3I investment company which holds 43 percent in the Middle East Tube Company has recently expressed its willingness to sell some of its stake for "a reasonable price," according to sources in the market yesterday. One source estimated that the sale would be conducted according to a company value of $40 million, which is at a 10 percent premium above Middle East Tube's current market cap.
3I denied the reports. "We are not in a sales process nor in any talks," the company said yesterday.
The move toward selling could be dependent on factors surrounding two publicly-traded companies, controlled by 3I.
The first is a Securities Authority investigation into suspected decisions made by Middle East Tubes apparently to benefit certain individuals from 3I. The individuals, Ian Davis and Aviv Algor, deny the suspicions. It would improve 3I's standing, particularly on its British operations, if through selling, it could distance itself from Middle East Tubes on this investigation.
The second factor covers the two attempts by 3I to issue bonds, one for Middle East Tubes and the other for Vita Pri-Galil, a manufacturer of food products. Middle East Tubes had published a prospectus for an NIS 90 million bond issue, but canceled, citing the opening of the Securities Authority investigation, and the unfavorable state of the market. The company said it would go ahead with the bonds in two months, but this plan seems also to have been dropped.
Vita Pri-Galil also canceled its proposed bond issue, because of the shaky financial condition of the company; It owes some NIS 170 million to the banks. Potential bondholders would have been worried that a company in such a state would not find it easy to meet its bond payments.
Selling a stake in Middle East Tubes would enable 3I to provide a more stable financial footing to Vita Pri-Galil.
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