After Criminal Conviction and Debt Troubles, Real Estate Developer Seeks Bond Offering

With a past criminal conviction and a prison sentence he once received, businessman Meir David, now Davidi, is trying to raise debt for the real estate company Nitzanim, which he owns. The company is seeking to raise about 150 million shekels through a bond offering. Founded in 2015, the company mainly operates in development and owns projects in various planning stages totaling about 5,100 housing units and about 13,565 square meters of office, retail and industrial space. In addition, it is working to build a project that will include 168 rental housing units on Jabotinsky Street in Ramat Gan.

In the early 1990s, Davidi, who changed his last name in recent years, and his then-partner Tal Yegerman brought two companies to the local stock exchange, Miromit Metal Works and Ogdan Systems. Shortly afterward, the two found themselves in a legal storm, following a long series of liquidation requests and lawsuits that included serious allegations against them. In 2008, the Tel Aviv District Court convicted the two of theft by authorized person, obtaining something by fraud under aggravated circumstances, breach of trust in a corporation, and forgery under aggravated circumstances. Yegerman was sentenced to 20 months in prison, while Davidi received 10 months in prison. This came after the two pledged the shares of Ogdan’s subsidiaries, John Bryce and AMS, to an American-Israeli bank in order to secure personal loans they took out totaling 3 million shekels. In addition, they requested and received a loan from a group of lenders based on false declarations that they were the registered owners of one-third of the subsidiaries’ shares. They also negotiated on behalf of Ogdan to obtain a loan, while presenting false impressions that they were acting with the approval of the company’s board of directors, which, according to the indictment, led to Ogdan’s collapse. That same year, Davidi also admitted and was convicted of 12 offenses of failing to file periodic VAT reports, and was sentenced to six months’ probation. In addition, he asked to be declared bankrupt following the collapse of SBC, his magazine company, which published magazines such as Forbes Israel, Cosmopolitan and Masa Acher. At the time, Davidi claimed the company’s debts totaled about 25 million shekels, most of which he personally guaranteed, and also claimed that there were enforcement cases against him totaling about 9.5 million shekels.

The prospectus for Nitzanim’s offering reveals that Davidi personally guarantees the company’s loans in the amount of about 232 million shekels. Proceeds from the offering are intended to repay credit lines that were extended to the company for projects it is advancing, amounting to 20 million shekels. In addition, the proceeds are expected to be used to provide equity for some of the projects, at an estimated amount of 80 million shekels.

Family members of the controlling shareholder Davidi hold a variety of positions at Nitzanim and provide it with a range of services. His wife, Vered, heads the company’s legal department, despite having only a secondary-school education, and is entitled to annual compensation of about 240,000 shekels. Their son, Uri, serves as vice president for business development, while Davidi’s brother, Yitzhak, is employed as head of the licensing department. A familiar name in the prospectus is businessman Shaul Naoi, the controlling shareholder of non-bank credit company Yaakov Finance, who has options to purchase 6% of the company’s shares.

Nitzanim said: "The publications refer only in part to events that took place more than 30 years ago and do not reflect the full facts. In 1992, Ogdan Ltd. received a loan of about 3 million shekels from American Israeli Bank, while Mr. Meir Davidi served as a director of the company alongside Tal Yegerman and Yuval Avraham. In 1994, Mr. Davidi ended his involvement in the company and its activities, many years before the indictment was filed and the subsequent proceedings took place. In the legal proceedings, it was determined that the offenses were committed by employees at lower levels, and Mr. Davidi was acquitted of most of the charges against him. In the ruling on appeal, Mr. Davidi was convicted only of breach of trust and was sentenced to six months in prison to be served through community service. Davidi also reached a settlement with the bank and paid the full debt that was demanded of him. It should be emphasized that these were events that took place 34 years ago, while the appellate ruling was issued in 2006, and since then a long period has passed during which the conviction was removed from the criminal record. Nitzanim and its current operations, which have been conducted for more than two decades in accordance with the law and in full transparency, have no connection to those historical events."