Rami Levi Real Estate is moving into in-house construction and will gain control of a building company that will carry out works on its own development projects. The company signed a non-binding memorandum of understanding to buy 80% of an unnamed contractor, later identified as Reshit Building, which is controlled by Dani Benita.
Under the deal, Rami Levi Real Estate will provide Reshit Building with a NIS 13 million shareholder loan at prime plus 1.5%, and in return will receive the controlling shares without paying additional consideration. The money is intended to settle the company’s obligations to suppliers, lenders, authorities and employees, as well as to release Benita’s personal guarantees. Shareholder loans previously advanced by Benita to the company will also be canceled.
According to the understanding between the sides, Benita will continue managing the company for seven years. The final agreement is also expected to set a pricing mechanism for the construction services Reshit Building will provide to Rami Levi Real Estate on future projects.
Rami Levi Real Estate, led by Motti Hazan and controlled by Rami Levi, said Reshit Building currently works on three projects for other companies, but the buyer will not be exposed to the liabilities or risks arising from those jobs. The company said the investment is not material relative to its market value, about NIS 3 billion since its IPO earlier this year, but it is strategically important because it is developing projects worth about NIS 1 billion and expects ownership of a contractor to improve schedule control and reduce construction costs.
