Receiver Asks Court for Advice on Ace Sale

The receiver for the Galaxo Group, attorney Lipa Meir, asked the Tel Aviv District Court yesterday for instructions on how to sell the group's holdings in do-it-yourself chain Ace Buy & Build.

Meir submitted details to the court of the problems connected to the proposed sale, principally a dispute between Gad Zeevi, who owns the Ace stake through Galaxo, and his partner Shlomo Zbeida, who is leading a consortium mounting a bid for the entire Ace chain.

According to Meir's submission, the receiver currently has two offers for the Ace shares: one for $22.8 million from Zbeida and Benny Gaon; and an offer from the Markstone fund to buy Ace's chain, Auto Depot, for no less than $25 million. Markstone stressed that the offer was contingent on a public auction of Galaxo's stake in the DIY chain, and that its bid was therefore only an opening price.

Compounded by the receivership status, the sale is not straightforward, as Zbeida says he holds a right of first refusal over any sale by Zeevi in Ace, while Zeevi insists - and reiterated this in a letter submitted with the receiver's papers yesterday - that the controlling owners of Galaxo object to a private sale of the Ace holdings, and demand a public auction.

And there lies the rub. The receiver and First International Bank of Israel, the major creditor, would prefer a smooth and quick sale, and one that would avoid any lengthy legal squabbling too. Selling to Zbeida's consortium would avoid a legal battle with the existing partner, but Markstone's offer would satisfy the auction demand from Galaxo.

Meir also informed the court that there were additional parties interested in the Ace Buy & Build chain who were waiting for the court's ruling before advancing their offers.