The special managers named by a court on Monday to oversee Eliezer Fishman’s Jerusalem Economy Corporation shares sought yesterday to have Fishman and allies removed from the company’s board after they arranged a share offering behind the managers’ back.
- Jerusalem Economy Corporation rallies as Fishman, Leumi reach pact
- How bankrupt Israeli tycoon Eliezer Fishman got away with it for so long
Eyal Rosovsky and Ronen Matry, who were appointed at the behest of Bank Leumi, acted after JEC issued 200 million shekels ($51.5 million) in new shares on Wednesday night at a discounted price of 5.55 shekels each. The offering includes 50 million shekels in warrants convertible to shares in the next 12 months at 6.55 shekels each.
As a result the issue, which valued the company at just a fourth of its 1.6-billion-shekel shareholders’ equity, will dilute the Fishman stake to 28% from close to 40%, assuming the warrants are exercised.
“Less than two days after the special managers were appointed, to their surprise the company and its management completely ignored them and acted unilaterally, without any cooperation, warning or knowledge of the special managers or Bank Leumi,” the bank’s attorneys told the court in a petition.
Rosovsky and Matry were appointed late on Monday in a compromise between Fishman, an embattled businessman with an estimated 4 billion shekels in debts, and Leumi, which seeks to recover as much as it can of the hundreds of millions of shekels he owed the bank. The JEC shares are a key piece of collateral the bank hopes to sell.
The special managers asked the Tel Aviv District Court to remove Fishman and three company directors regarded as close to him — his son Eyal Fishman, daughter Anat Menipaz and Ronit Even. The court gave Fishman until noon tomorrow to respond.
In spite of the storm around JEC, its share closed up 10.6% at 7.30 shekels in Tel Aviv Stock Exchange trading. The company completed a swap of its short-term Series Vav bonds with long-term Series Yod bonds, a move that will help it repay debt through the end of the year. JEC bonds climbed 8%.