Haim Katzman Seeks Immediate Buyer for G City Control After Deal Collapse

Following the final cancellation of the sale of control in G City, Haim Katzman has begun searching for an alternative buyer to acquire a similar stake at a comparable valuation. Unlike the previous agreement with Ari Real Estate, controlled by Tzachi Abu, Katzman now prefers to complete the sale in a single, immediate transaction rather than in two stages. Last month, Ari Real Estate signed a deal to purchase 26% of G City shares from Norstar, Katzman's holding company, at a valuation of 2.55 billion shekels, with an option to buy an additional 7% to gain control. Subsequently, Abu brought in equal partners Yaron Adiv and Kidan Dahari through their fully owned company, Yishpro.

Following the deal's collapse, Norstar's stock dropped over 5% to a market value of 465 million shekels, below its pre-deal trading price. G City's shares also fell about 4%, accompanied by an unusually high trading volume of 32.5 million shekels, possibly indicating a potential buyer accumulating shares to negotiate from a stronger position later. G City's bonds reacted more sharply, with yields on a recently issued series rising from 4.75% to 5.85%, signaling higher future borrowing costs.

In a recent investor call, Katzman emphasized his intent to quickly find a new partner, noting he had received 19 inquiries, including two new ones that morning. He warned that without a partner soon, G City could face difficulties, as the company needs a capital injection of about one billion shekels to meet debt repayments totaling 1.7 billion shekels in 2027, including 700 million shekels due in March. Currently, the company holds approximately 2.1 billion shekels in cash, partly from last week's bond issuance, though currency fluctuations may reduce this in the coming quarter.

One serious potential buyer was billionaire Roman Abramovich, who met with Katzman's team, but talks failed due to technical issues. Katzman stated the deal cancellation was initiated by the other party, though he pushed for reviewing the partnership agreement between Abu and Yishpro, fearing that Adiv and Dahari might gain control alone, which he viewed as a financial risk. Abu later informed his partners he preferred to withdraw rather than partner with Katzman, leading to an amicable split.

If Katzman cannot find a new partner, he may continue asset sales to reduce G City's high leverage, currently at 75%, aiming to lower it to 50%. Options under consideration include distributing G City shares as an in-kind dividend, removing a controlling shareholder and enabling subsidiary IPOs.