The tug of war for Alon Blue Square grew more complicated over the weekend after Gad Zeevi made a competing offer for control of the embattled holding company just as Gindi Holdings acted to improve the terms of its bid.
- Alon Blue Square's YouPhone enters crowded cellular market
- Gindi Holdings agrees to buy embattled Alon Blue Square
- Israel's Alon Blue Square reaches $223 million debt agreement
Zeevi offered to buy 51% of Alon Blue Square for 85 million shekels ($21.2 million) from controlling shareholders, Shraga Biran, David Weismann and the kibbutz purchasing organization. He also offered to take an option to buy the remaining 21% of their shares at the same valuation within three years.
In addition, Zeevi offered to inject 500 million shekels into Alon Blue Square, which owes banks and bondholders a combined 900 million shekels. He committed to injecting the first 250 million after he has control of the company and the rest within 120 days.
The offer stands in contrast to Gindi Holdings’ bid to buy Alon Blue Square for 115 million shekels and a commitment, it added to the offer on Thursday, to inject 240 million into the company.
Shares of Alon Blue Square tumbled 10.2% to close at 1.41 shekels on the Tel Aviv Stock Exchange Sunday.
No other offers to buy Alon Blue Square are likely to emerge in the two days left before bondholders meet to decide whether they will exercise their option to demand immediate repayment of 380 million shekels in debt if the company fails to find a buyer for its principal asset, Blue Square Real Estate, by February 25.
Gindi Holdings had made the high bid for Blue Square Real Estate, but its 1.8 billion offer was put aside when the company opted instead for the cheaper alternative of buying Alon Blue Square itself. Sources said, however, that Alon Blue Square had received two nonbinding offers on Sunday and that one or two more offers are likely to emerge before bondholders meet this week.
Creditors are wary of the plans to sell Alon Blue Square and prefer that the real estate unit be auctioned off instead. They object to a clause in the Gindi Holdings that would require creditors to surrender their rights to sue to its board or executives.
They are also skeptical about the Zeevi offer. “Zeevi is undertaking, for example, to inject 500 million shekels into Alon Blue Square, half right now and half in another 120 days, without relating to the issue of what guarantees he plans to give on his commitment for the second 250 million shekels, if bondholders agree to the plan but potential buyers of Blue Square Real Estate opt out,” said one creditor, who asked not to be named.
Meanwhile, trustees overseeing the sale of the Mega supermarket chain formally launched the process on Sunday. The sale seeks a single buyer for the 127 stores rather than offering each of them to the highest bidder as some had proposed.
The deadline for bids is February 23. The chain has been under court protection from creditors since the start of January. Rami Levy, the discount food retailer, is expected to make an offer even though Antitrust Authority officials have warned they will likely reject it.
Yenot Bitan and an investor group led by Yossi Sagol, whose family controls Keter Plastic are also bidding.