The Fall of a Giant

Ben Yakar Gat Engineering and Construction, which changed its name to Hiram Gat when the Landau family bought into the company, was one of the country's best-known and veteran companies in the construction industry. Even in its less successful years, Hiram Gat had annual revenues of NIS 350-400 million.

However, the protracted recession in the real estate sector in recent years, the drop in the value of the shareholders' and creditors' holdings, and the generation of substantial profits for former controlling shareholders - brothers Yisrael and Binyamin Ben Yakar and David Gat - brought the real estate giant to its knees.

Hiram Gat's collapse did not begin yesterday. The fact that some of the company's controlling shareholders - i.e. the Landau family - have deep pockets thanks to their holdings in Union Bank and Granite Hacarmel Investments, and that the company's board of directors includes experienced businessmen such as Zvi Yochman (a company liquidator and partner of accountant Itzhak Swary), Yekutiel Gavish and Aliza Schloss, just delayed the company's fall by two years.

Landau, who had invested tens of millions of shekels in the company, signed guarantees, spearheaded the big cost-cutting program, and continued to sell off assets, decided to give up. Bank Leumi's refusal to honor hundreds of checks that had been given to suppliers and subcontractors made it impossible for the company's executives to continue operating, and they asked the board of directors for advice. The board, chaired by Yeshayahu Landau, decided to resign because, "the reins of management have fallen from their hands and they can no longer direct the company's actions."

In the summer of 2001, when the company's crisis worsened as it suffered annual losses of NIS 20 million, Hiram Gat's equity deficit ballooned and the Ma'alot credit rating company decided to reduce its credit rating to that of junk bonds (-CCC). At that time, the banks also began to pressure the company. David Gat, who owned 25 percent of the company's shares, commenced "Buy Me Buy You" proceedings, which are relatively rare on the Tel Aviv Stock Exchange.

At the end of that process, the Ben Yakar brothers sold their holdings in the company for the price of two penthouse apartments in Tel Aviv - Landau paid $1 million and received control of the company. As Hiram Gat's fortunes continued to decline, its shares were suspended from trade, and this summer were removed from the bourse.