zk1007861.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): February 4, 2010
(January 31, 2010)
Ampal-American
Israel Corporation
(Exact
name of registrant as specified in its charter)
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New
York
(State
or other jurisdiction of incorporation)
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0-538
(Commission
File Number)
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13-0435685
(IRS
Employer
Identification
No.)
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555
Madison Avenue
New
York, NY, USA
(Address
of principal executive offices)
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10022
(Zip
Code)
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(866)
447-8636
(Registrant’s
telephone number, including area code)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry into a Material
Definitive Agreement.
The
information relating to the Credit Facility and the Loan Agreement (both as
defined below) contained in Item 2.01 in this Current Report on Form 8-K is
hereby incorporated by reference.
Item
2.01 Completion of Acquisition or
Disposition of Assets.
Acquisition
of 012 Smile
On
January 31, 2010, Ampal-American Israel Corporation (the “Company”), through its
indirect wholly owned subsidiary Merhav Ampal Energy Ltd. (“MAE”) and MAE's
wholly owned subsidiary 012 Smile Telecom Ltd. ("012 Smile Telecom," formerly
Ampal Investments and Communications 2009 Ltd.), completed its previously
announced purchase of the current on-going business of 012 Smile Communications
Ltd. (“012 Smile”) for 1.2 billion New Israeli Shekels, or approximately $322
million, pursuant to an Asset Purchase Agreement (the "Agreement") between MAE
(on behalf of 012 Smile Telecom) and 012 Smile dated November 16, 2009, as
amended on January 26, 2010. The Company, through its subsidiaries, acquired
substantially all the assets and liabilities of 012 Smile, including all of its
customer and supplier agreements, management, employees, infrastructure,
equipment and other assets, but excluding (i) certain retained cash and other
customary excluded assets, (ii) the rights and obligations of 012 Smile related
to the acquisition of Bezeq – The Israeli Telecommunications Corporation Ltd.
and (iii) certain indebtedness and other liabilities. Prior to closing the
acquisition, 012 Smile Telecom received all required licenses for the conduct of
the business from the Israeli Minister of Communication.
012 Smile
is a leading provider of communication services in Israel, offering a wide range
of broadband and traditional voice services. 012 Smile’s broadband services
include broadband Internet access with a suite of value-added services,
specialized data services and server hosting, as well as new innovative services
such as local telephony via voice over broadband and a WiFi network of hotspots
across Israel. Traditional voice services include outgoing and incoming
international telephony, hubbing, roaming and signaling and calling card
services. 012 Smile services residential and business customers, as well as
Israeli cellular operators and international communication services providers
through its integrated multipurpose network, which allows 012 Smile to provide
services to almost all of the homes and businesses in Israel.
Financing
of the Acquisition
The
Company financed the transaction with a combination of (i) available cash, (ii)
the proceeds of a new credit facility, dated January 31, 2010 (the “Credit
Facility”), between 012 Smile Telecom, Bank Leumi Le'Israel B.M. ("Leumi") and
Israel Discount Bank Ltd. ("Discount," and together with Leumi, the "Bank
Lenders"), for 800 million New Israeli Shekels, (approximately $215 million) and
(iii) a loan agreement, dated January 31, 2010 (the "Loan Agreement"), between
MAE, 012 Smile Telecom, Harel Insurance Company Ltd. and its affiliates
(collectively, "Harel") and Menora Mivtachim Insurance Ltd. and its affiliates
(collectively, "Menora," and together with Harel, the "Institutional Lenders"),
for 220 million New Israeli Shekels (approximately $59 million).
Credit
Facility
The loan
under the Credit Facility was funded 80% by Leumi and 20% by Discount. Leumi was
appointed arranger on behalf of the Bank Lenders. The Credit Facility,
denominated in New Israeli Shekels, is divided into three tranches as follows:
500 million New Israeli Shekels (or approximately $134 Million), 200 million New
Israeli Shekels (or approximately $54 Million) and 100 million New Israeli
Shekels (or approximately $27 Million), respectively, which are subject to the
following terms:
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The
first tranche matures in 2017, with the principal payable in fourteen
equal semi-annual installments, with the first payment due on July 31,
2010. The interest on the first tranche accrues at a rate of 4.2% per
year, payable every three months, with the first payment due on April 30,
2010. The principal and interest payments are linked to the Israeli
consumer price index.
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The
second tranche has no principal payments until maturity in 2017, when a
single balloon payment will become due. The interest on the second tranche
accrues at a rate of 5.1% per year, payable every three months, with the
first payment due on April 30, 2010. The principal and interest
payments are linked to the Israeli consumer price
index.
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The
third tranche is a revolving loan for terms of three, six or twelve
months, at the discretion of 012 Smile Telecom, provided that the final
maturity of the loan is no later than July 31, 2013. The interest on the
third tranche is based on the prime interest plus a spread and accrues at
a rate of prime plus 0.75% per year, is payable every three months, with
the first payment due three months after receipt of the relevant loan
amount.
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The
Credit Facility contains customary affirmative and negative covenants for credit
facilities of this type, including, among others, (i) providing the Bank Lenders
with certain financial information, (ii) the maintenance by 012 Smile Telecom of
a minimum EBIDTA, (iii) the maintenance by 012 Smile Telecom of certain debt
service ratios, (iv) the maintenance by 012 Smile Telecom of certain minimum
debt to EBIDTA ratios, (v) limitations on distributions and dividends to
stockholders by 012 Smile Telecom, subject to certain exceptions, and (vi)
ensuring that 012 Smile Telecom remain the sole owner of the acquired business
of 012 Smile and that it not make any material changes to the business or to its
corporate structure.
The
Credit Facility provides for customary events of default, including, among
others, failure to pay any principal or interest when due, failure to comply
with covenants, any material representation or warranty made by 012 Smile
Telecom proving to be false in any material respect, certain bankruptcy,
insolvency or receivership events affecting the Company, 012 Smile Telecom or
their respective affiliates, defaults relating to certain other indebtedness,
revocation of a permit or license required in the operations of 012 Smile
Telecom's business, the merger, spin-off or the like of 012 Smile Telecom, the
Company or affiliates thereof, imposition of certain judgments and a change in
control of the Company or 012 Smile Telecom.
012 Smile
Telecom's rights and assets have been pledged to the Bank Lenders as security
for the Credit Facility. The Company and MAE have also guaranteed all the
obligations of 012 Smile Telecom under the Credit Facility, as well as up to 43
million New Israeli Shekels (or approximately $11.5 Million) of additional
credit from the Bank Lenders. MAE also pledged to the Bank Lenders all the
equity it holds in, or debt owed to it by, 012 Smile Telecom. In
addition, the Company agreed with the Bank Lenders to comply with certain
covenants during the period of its guarantee, including, among others, to
maintain a minimum stockholders' equity and a maximum ratio of net indebtedness
to net capitalization, and that Mr. Yosef A. Maiman remain the controlling
stockholder of the Company.
Loan
Agreement
Pursuant
to the Loan Agreement, the 220 Million New Israeli Shekels (or approximately $59
Million) principal of the loan is payable in equal semi-annual installments on
January 31 and July 31 of each year, with the first payment due on January 31,
2012. The interest on the loan accrues at a rate of 7% per year, payable in
equal semi-annual installments on January 31 and July 31 of each year, with the
first payment due on January 31, 2011. The principal and interest
payments are linked to the Israeli consumer price index. The loan is
also subject to a semi-annual fee at a rate of 0.5% of the unpaid principal and
a semi-annual fee based, among other things, on the EBIDTA of 012 Smile
Telecom.
012 Smile
Telecom's rights and assets will be pledged (subject to the approval for such
pledge by the Israeli Minister of Communication) to the Institutional
Lenders as security for the Loan Agreement. MAE also pledged to the
Institutional Lenders all the equity and debt it holds in or is owed by 012
Smile Telecom. The Company has also guaranteed all the obligations of 012 Smile
Telecom under the Loan Agreement. An amount of 20 million New Israeli Shekels
(or approximately $5.3 Million) from the loan amount was also deposited in a
special account, which was pledged by MAE in favor of the Institutional
Lenders.
The Loan
Agreement contains customary affirmative and negative covenants for credit
facilities of this type, including, among others, (i) the maintenance of minimum
stockholders' equity in the Company, (ii) the maintenance by the Company of a
maximum ratio of net indebtedness to net capitalization, (iii) the maintenance
by 012 Smile Telecom of a maximum ratio of indebtedness to EBIDTA, (iv) certain
limitations on payment of management fees to the control holders of 012 Smile
Telecom, (v) providing the Institutional Lenders with certain financial
information, and (vi) mandatory pre-payment obligations in the event of certain
dispositions by MAE. In addition, the Company has agreed not to distribute any
dividends prior to the first interest payment date under the Loan Agreement,
which is January 31, 2012.
The
Loan Agreement provides for customary events of default, including, among
others, failure to pay any principal or interest when due, failure to comply
with covenants, any material representation or warranty made by MAE or 012 Smile
Telecom proving to be false in any material respect, certain bankruptcy,
insolvency or receivership events affecting the Company, MAE or 012 Smile
Telecom, defaults relating to certain other indebtedness (including indebtedness
to the Bank Lenders), Mr. Yosef A. Maiman, ceasing to be a controlling
stockholder of the Company, revocation of a permit or license required in the
operations of 012 Smile Telecom's business, imposition of certain judgments, a
sale of the business or assets of MAE or 012 Smile Telecom, a change in control
of MAE in 012 Smile Telecom and a downgrading of the Company's publicly traded
notes by Israeli domestic rating agencies to BB+ or less or revocation of such
rating.
The
foregoing descriptions of the Agreement, the Credit Facility and the Loan
Agreement do not purport to be complete and are qualified in their entirety by
reference to the full text of the transaction documents, which the Company
intends to file as exhibits to its next annual report on Form 10-K.
A copy of
the Company’s press release announcing the closing of this transaction is
attached hereto as Exhibit 99.1 and is incorporated in this report by
reference.
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Item
2.03
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Creation of a Direct
Financial Obligation or an Obligation under an Off- Balance Sheet
Arrangement of a Registrant.
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The
information relating to the Credit Facility and to the Loan Agreement contained
in Item 2.01 in this Current Report on Form 8-K is hereby incorporated by
reference.
The
Company currently plans to hold its 2010 Annual Meeting of Shareholders (the
“2010 Annual Meeting”) on May 5, 2010. The date of the 2010 Annual Meeting will
occur more than thirty (30) days before the anniversary of the Company’s 2009
Annual Meeting of Shareholders. As a result, the Company has set new deadlines
for the receipt of any shareholder proposals.
Rule 14a-8 Shareholder
Proposal Deadline
For
shareholder proposals submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), to be presented at our
2010 Annual Meeting and included in the Company’s proxy statement, such
proposals must be submitted and received by the Secretary of the Company at our
principal offices, Ampal-American Israel Corporation, 555 Madison Avenue, New
York, NY 10022, by the close of business on March 15, 2010, which we believe is
a reasonable time before we will begin to print and send our proxy materials.
Such proposals will need to comply with the rules of the Securities and Exchange
Commission regarding the inclusion of shareholder proposals in the Company’s
proxy statement, and may be omitted if not in compliance with applicable
requirements.
Timely Notice under Rule
14a-4(c)
If a
shareholder wishes to submit a proposal outside of Rule 14a-8, which is not
intended to be included in the Company’s proxy statement, in order for such
proposal to be considered “timely” for the purposes of Rule 14a-4(c) under the
Exchange Act (relating to the circumstances under which a proxy may confer
discretionary authority to vote on certain matters), the proposal must be
received at the above address not later than March 15, 2010, which we believe is
a reasonable time before we will begin to send our proxy materials for the 2010
Annual Meeting.
The
Company recommends that shareholders submit their proposals by means that permit
them to prove the date of delivery, such as by certified mail with return
receipt requested.
Item 9.01 Financial Statements and
Exhibits.
(a) Financial
Statements:
The
financial statements required by Item 9.01(a) of Form 8-K were filed by the
Company on Form 8-K/A on December 8, 2009 as Exhibits 99.1 and 99.2
thereto.
(b) Pro
Forma Financial Information:
The pro
forma financial information required by Item 9.01(b) of Form 8-K were filed by
the Company on Form 8-K/A on December 8, 2009 as Exhibit 99.3
thereto.
(d) Exhibits:
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99.1
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Press
release of Ampal-American Israel Corporation, dated January 31,
2010.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AMPAL-AMERICAN
ISRAEL CORPORATION |
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Date:
February 4, 2010
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By:
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/s/ Yoram
Firon |
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Name: Yoram Firon |
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Title: Vice President -
Investments and
Corporate
Affairs
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EXHIBIT
INDEX
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99.1
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Press
release of Ampal-American Israel Corporation, dated January 31,
2010.
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