Business in Brief - Elsztain, Ben-Moshe to Exercise Warrants

Labor slowdown begins at Israel Chemicals; U.S. court acquits Mizrahi executive of tax violations; Wall Street pushes Tel Aviv shares higher.

Daniel Bar On

Elsztain, Ben-Moshe to exercise warrants

Eduardo Elsztain and Moti Ben-Moshe, controlling shareholders of IDB Development Corporation, said on Sunday that they will exercise their Series 1 warrants for 176 million shekels ($46.4 million) of shares in the financially troubled holding company. The move will cost them because the strike price for the warrants is 5.50 shekels, which amounts to a 28% premium on the shares’ Sunday closing price, even after they shot up 11.5% on the news to 4.29 shekels. IDB, meanwhile, said it expected to post a third-quarter loss of between 400 million and 480 million shekels. The company, which pre-released the estimate before its controlling shareholders exercise the warrants to buy more shares in the company, attributed the loss to a decline in the value of its Clal Insurance unit and costs connected with a loan it received from its Chinese joint venture partner in the agrochemicals company Adama. A stronger dollar also dented earnings. Despite the loss, IDB’s negative equity will actually shrink for the quarter mainly because of a rights issue in July that injected 320 million shekels into the company. (Michael Rochvarger)

Labor slowdown begins at Israel Chemicals

Israel Chemicals’ employees began what they said is an open-ended labor slowdown on Sunday, blocking shipment of products from all the company’s plants. Workers also blocked deliveries of raw materials to ICL factories, a move that will force the company to suspend production. Avner Ben-Senior, chairman of the workers’ committee at ICL’s bromine unit, said the actions were taken to protest management cost-reduction plans, which includes layoffs and the closing of the Magnesium plant at Sodom. Management blamed its decision to make cutbacks at its operations in Israel on the government’s Sheshinski committee, which has recommended raising taxes and royalties on natural resource companies like ICL. Management “hopes that the workers’ committee understands the need for urgent cost-cutting and will lend a hand by cooperating,” it said. ICL shares ended up 0.4% at 25.63 shekels ($6.75) in Tel Aviv. (Haim Bior)

U.S. court acquits Mizrahi executive of tax violations

A United States Federal court on Friday acquitted a retired senior vice president at Mizrahi Tefahot Bank’s Los Angeles office of charges he helped his clients conceal their assets from the Internal Revenue Service. Jurors cleared Shokrollah Baravarian, 82, of conspiring to defraud the U.S. and helping clients prepare false tax returns. Prosecutors claimed Baravarian helped clients open accounts in Israel and access money through loans from the Los Angeles branch. But six taxpayers testifying as government witnesses all admitted they didn’t conspire with Baravarian to cheat on their taxes. “These taxpayers did what they did on their own, and they didn’t pay taxes on their accounts,” Baravarian’s defense attorney, Marc S. Harris, told Bloomberg News. Baravarian worked from 1982 to 2009 for Mizrahi, Israel’s fourth-biggest bank. Mizrahi shares finisher 0.4% higher at 42 shekels ($11.06) in Tel Aviv. (Sivan Aizescu)

Wall Street pushes Tel Aviv shares higher

Tel Aviv shares rose sharply on Sunday, paced by technology shares after the Dow and S&P 500 ended at record highs on Friday. The benchmark TA-25 index finished 0.9% up at 1,437.64 points, and the TA-100 by 1.1% to 1,291.31, on turnover of 614.3 million shekels ($161.8 million). “I believe that even if the Bank of Israel doesn’t launch a quantitative easing program, the environment will continue supporting low interest rates,” said Idan Azoulay of Epsilon Mutual Funds. “As a result, we’ll continue seeing money moving into risk assets, primarily stocks.” Leading tech stocks higher was EZchip, with a gain of 4.7% to 80.76 shekels. Allot advanced 4.4% to close at 43.56, and Sapiens by 4.2% to 29.48. Teva Pharmaceuticals extended gains from last week’s strong quarterly report to add 1.1% and close at 212.40 shekels. The Tel Aviv Stock Exchange board has approved a new index – the Tel-Bond Variable Rate index, aimed at attracting investors betting on interest rates rising. (Dror Reich)