Africa-Israel bondholders choose Keystone for Road 6 stake

Infrastructure fund Keystone will buy the holdings of Africa-Israel Investments Ltd. in the operating company of Road 6 and other important roads in Israel (a group of operating companies). The trustees for the bonds issued by Africa Israel yesterday reported that at a meeting of the bondholders last Thursday, Keystone's bid had won a substantial majority among holders of the three bond series.

Following the sale, Africa-Israel will be left with one main asset - ownership of infrastructure contractor company Danya Cebus Ltd. (TASE: DNYA), which also holds 74% of the shares in housing project development company Africa-Israel Residences.

Last week, Keystone signed an agreement to acquire Alon Group's 29% holding in the group of operating companies at the same company value of NIS 513.6 million. Alon Group, of which the bondholders assumed ownership last year, will receive NIS 149 million in proceeds from the sale and use it to repay some of its debts to the bondholders.

Following the completion of the acquisition, Keystone will give insurance companies Clal Insurance and Phoenix 30 days to buy 32.6% of the shares at the bid price. At the same time, Shikun & Binui will also receive a 30-day option to increase its stake in the operating companies to 46% (35.5% total now). If both options are exercised, Keystone's stake will be reduced to only 21.4%.

Keystone is a new REIT fund for investment in infrastructure founded by Roni Biram, Gil Deutsch, and Navot Bar. A group of companies that operate Dor Alon filling stations, controlled by Moti Ben-Moshe, competed against Keystone, offering to buy Alon and Africa-Israel shares at a slightly higher value than offered by Keystone. The current distrust between Ben-Moshe and many investment institutions, however, was probably the decisive factor in the vote to prefer Keystone's bid.