Abu Family Secures 50 Million NIS Loan from Clal Insurance in Expansion Drive
Abu Family Residences secured a 50 million NIS loan from Clal Insurance alongside a warrant issuance that could significantly raise Clal's stake in the developer. The deal supports the real estate firm's ongoing expansion strategy.
Real estate company Abu Family Residences has signed a financing agreement with Clal Insurance Enterprises Holdings, under which Clal will provide a 50 million NIS unlinked shekel loan for a period of six years. According to the agreement, the loan principal will be repaid in a single payment at the end of the term. As part of the terms, Abu Family will issue unlisted warrants to Clal, the exercise of which could make Clal's investment arm a substantial stakeholder in the company.
The allocation framework includes two types of options exercisable for up to 8.25 million ordinary shares. The first tier includes 2 million options exercisable in cash within 30 days at a price of 5.815 NIS per share, a rate higher than the closing price on the Tel Aviv Stock Exchange on the eve of the agreement. Full exercise of this component will inject approximately 11.63 million NIS in cash into the company's coffers. The second tier includes 6.25 million conversion warrants for a period of six years, at an exercise price of 8 NIS per share, to be executed by offsetting against the loan principal.
Prior to the transaction, Clal Insurance held approximately 4.64% of Abu Family Residences shares. Full exercise of the warrants will increase its total holding in the company to approximately 15.16% of the capital (and about 9.53% fully diluted). The exercise shares alone will constitute approximately 11.03% of the voting rights in the company following the exercise. Completion of the transaction is subject to approval by the Tel Aviv Stock Exchange for the listing of the shares for trading and the fulfillment of customary precedent conditions.
This financing follows a recent expansion by Abu Family Residences, controlled by Tsahi Abu. Two weeks ago, the company signed a deal to acquire 50 residential units from Azorim in the N Weizmann project in Netanya for a total consideration of approximately 120 million NIS, estimated at a 20% discount to market price. This marks the company's third major residential block acquisition this year, following the purchase of 40 units in Bnei Brak for 90 million NIS in February and 50 units in Jerusalem for 156 million NIS in May.
