Av-Gad Secures $13 Million Deal with Barak Finance for Urban Renewal Projects
Translated & summarized from Ice by baba
Construction firm Av-Gad has finalized a deal with Barak Finance, securing 49 million shekels for urban renewal projects after receiving tax authority approval. The agreement involves a joint venture where Barak Finance will hold a 49% stake. Av-Gad, led by CEO Raam Razon, has a significant project pipeline and reported improved financial performance, including a shift to profitability in the second quarter.
The story in 6 lines · by baba
- Av-Gad finalized a deal with Barak Finance, securing 49 million shekels for urban renewal projects.
- The deal involves a joint venture, "Av-Gad Ba'ir," where Av-Gad will hold 51% and Barak Finance 49%.
- Barak Finance will receive 44,000 shares in "Av-Gad Ba'ir" and a 49% stake in a Petah Tikva project.
- Av-Gad has 12 projects nearing completion and 39,000 units in planning.
- The company reported a net profit of 29 million shekels in the second quarter, up from a loss.
- Av-Gad's revenues grew to 116 million shekels in the first half of the year.
Av-Gad, a prominent construction company specializing in urban renewal, has finalized a significant deal with Barak Finance, receiving approval from the Israel Tax Authority to split and transfer rights. This transaction will inject approximately 49 million shekels (around $13 million) into Av-Gad, bolstering its position in the urban renewal sector, particularly in central Israel.
The agreement involves the transfer of 24 urban renewal projects to a joint venture named "Av-Gad Ba'ir." Under the terms, Barak Finance will invest 49 million shekels, with Av-Gad retaining a 51% stake and Barak Finance holding 49%. Barak Finance will also cover an additional 4 million shekels for past expenses. The approval from the tax authority was a prerequisite for the deal to proceed.
Barak Finance will receive 44,000 ordinary shares in "Av-Gad Ba'ir," representing 48.9% of its issued and paid-up capital, in two stages. Additionally, Barak Finance will acquire a 49% share of rights and obligations for the "Beit Hason - Anilevich - Ben Yehuda" project in Petah Tikva.
Av-Gad, led by CEO Raam Razon, has a substantial pipeline of projects, with 12 projects nearing completion totaling 1,824 apartments and an additional 39,000 units in the planning stages. The company saw a recovery in apartment sales, moving from 10 units in the first quarter to 32 units in the second quarter, with most sales occurring at the Bezalel Shalom project in Petah Tikva.
Financially, Av-Gad's revenues grew to 116 million shekels in the first half of the year, up from 81 million shekels in the same period last year. The company also shifted from a 7.5 million shekel loss in the second quarter of the previous year to a net profit of approximately 29 million shekels in the current year. Despite a persistent negative cash flow from operating activities totaling around 98 million shekels, the board asserts this does not indicate a liquidity problem and the company is expected to meet its obligations.