Israel Petrochemical Enterprises acquired the controlling interest in Bazan Group

After a roller-coaster of a year, we are pleased to announce the successful closing of a highly complex transaction in which, Israel Petrochemical Enterprises Ltd., traded on the Tel Aviv Stock Exchange under the symbol PTCH, acquired the controlling interest in the Haifa based oil refinery, Bazan Group, in consideration for NIS 550 million. The controlling interest was acquired from previously joint holder of Bazan Group, Israel Corporation (TASE: ILCO), resulting in Israel Chemical Enterprises becoming the sole controlling shareholder in Bazan Group.

The transaction proved challenging, primarily due to Israel Petrochemical Enterprises being insolvent, which required the simultaneous completion of several complex actions before closing of the transaction was made possible. These included: (1) reaching a debt settlement in the scope of NIS 1.5 billion between Israel Petrochemical Enterprises and its holders of 4 different series of debentures, in favor of whom Bazan Group’s controlling shares were charged as collateral; (2) an investment transaction by way of a convertible loan of NIS 100 million, extended to Israel Petrochemical Enterprises by new investors led by Mr. Yona Fogel, who will now be joining as controlling shareholders in Israel Petrochemical Enterprises alongside the David Federman family; (3) the exercise of a first refusal right by Israel Petrochemical Enterprises in connection with a proposed sale by Israel Corporation of its shares to Hagag Group, on the last date for exercise, and which entailed some difficulties posed by Hagag Group who were displeased having their proposed acquisition thwarted; (4) the issuance of a new series of debentures by Israel Petrochemical Enterprises in the scope of NIS 485 million; and (5) obtaining a permit from the State of Israel to hold the controlling interest in Bazan Group since the oil refinery is considered as State critical infrastructure.

The holders of the 4 series of debentures, holding a total debt of NIS 1.5 billion, were represented by our Insolvency and Restructuring Department, led by heads of department and partners, Advocates Raanan Kalir and Alon Binyamini, together with associates, Advocates Yarden Rosenbush and Mor Turgeman, and legal interns Shalom Kachlon, Elad Amir, Yuval Zamir and Chen Balaban.

The closing of the transaction also marks the conclusion of the position of Advocates Kalir and Binyamini as receivers over part of the controlling shares in Bazan Group, an appointment made following a motion filed with the court by holders of one series of debentures, who sought to have receivers appointed on their behalf in connection with the shares over which they held a charge as collateral.

To read the article published in Hebrew in Calcalist,  click here.