Israel Petrochemical Enterprises Ltd. (TASE:PTCH) has taken another step in its attempt to obtain a control permit for Oil Refineries Ltd. (TASE:ORL), which has been delayed for over a year. Petrochemical Enterprises, controlled by David Federman and chairman Jacob Gottenstein, through Modgal Industries Ltd., has submitted to the state an arrangement for reducing the influence of the Alder Group in the company so that it will not be a controlling shareholder in Petrochemical Enterprises. Alder is a subsidiary of holding company Menatep controlled by former oligarchs Leonid Nevzlin, Michael Brudno, and Vladimir Dubov.
Petrochemical Enterprises proposes that Federman and his partners will acquire Alder's 26% stake in Modgal. Alder will receive an option on 14.75% of Petrochemical Enterprises, which if exercised will change it from a controlling shareholder into a financial investor in the company. Federman and his partners are due to repay $100 million in loans which Alder had provided to their private companies, so that Alder will have no lien on the control shares in Petrochemical Enterprises.
Ofer Brothers subsidiary Israel Corporation (TASE: ILCO) owns 45% of Oil Refineries, and Petrochemical Enterprises owns 15.76% through wholly owned subsidiary Petroleum Capital Holdings Ltd. (PCH).
The state has refused to give Petrochemical Enterprises a control permit for Oil Refineries because of the involvement of the Russian oligarchs in Petrochemical Enterprises. Petrochemical Enterprises has an option through May 2009 to join the controlling interest in Oil Refineries under an agreement with Israel Corp.
In a separate, but related deal, Petrochemical Enterprises' board has approved management to move forward on the sale of its 50% stake in Carmel Olefins Ltd. to Oil Refineries, which owns the other half. The deal will be in the form of a share swap.
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2008
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