Former Rake Aspen CEO Claims Stock Dilution Amid Control Change
Shimon Cohen, former CEO of urban renewal company Rake Aspen, alleges the company unilaterally reduced his stake from 10% to 5%. These claims pertain to the period when Aspen Group controlled the company, not when Rananim Halili was the controlling shareholder. Cohen stated Halili appointed him CEO of Ofek Sheli Construction in 2018, where he was instrumental in reshaping the group's strategy from a mere execution firm to a broader group including a development arm. He led the establishment and growth of Ofek Sheli Development, including land acquisition and business infrastructure.
In 2022, Cohen led Ofek Development's bond issuance and, at Halili's suggestion, became its chairman. That August, the company approved granting him 10% of its shares, with vesting over three installments. The agreement stipulated that Cohen's shares would be adjusted to prevent dilution if the company's capital structure changed. This adjustment was intended to occur in March 2025, ahead of a planned issuance.
Cohen claims that David Ben-Zaken held 87.5% of Ofek Development shares and was chairman. In July of the previous year, Ben-Zaken sold a controlling 51% stake to Rake, part of Aspen Group, for NIS 30 million plus a NIS 50 million investment in new shares, valuing the company at NIS 155 million. As part of this deal, the vesting of Cohen's second and third share installments was accelerated before the control transfer, and he was to resign from the board. Cohen and Elior Gabai, then CFO, decided not to sell their shares and asserted their right against dilution.
Cohen believed the sale to Rake was detrimental and suspected Rake would manipulate the situation to acquire control cheaply. He alleges Ben-Zaken and Rake retaliated by diluting his holdings by half through changes in Rake Aspen's capital structure. He notes that an appraiser, Adina Greenberg, subsequently valued the company's projects significantly lower than the sale price, which would have justified the dilution. Cohen informed Rake that this would severely harm the company and jeopardize its viability due to its obligations to bondholders and financial institutions.
Following Cohen's warning, Greenberg's report was shelved, and a more favorable internal Rake report on the company's real estate value was allegedly withheld. Cohen resigned as CEO in December of the previous year, protesting the dilution, but Rake Aspen proceeded. He left his position in February and is now seeking a court declaration that he still holds 10% of the shares. A defense has not yet been filed.
