Salkind eyes Lumenis
Mivtach Shamir CEO Meir Shamir may also bid for the medical devices company.
Golan Fridenfeld and Tali Tsipori 14 Mar 06 17:40
Sources inform ''Globes'' that Elco Holdings Ltd. (TASE: ELCO) chairman and CEO Gershon Salkind is interested in acquiring the controlling interest in Lumenis Ltd. (OTCBB:LUME). Salkind is joining Mivtach Shamir Holdings Ltd. (TASE:MISH) chairman and CEO Meir Shamir and quite a few other entities expressing an interest in taking over the Yokneam-based company, which has been in recovery for the past two years.
Mivtach Shamir today responded to press reports that it was bidding for Lumenis, saying, “We periodically review various investments as part of our regular business.” The company said that, at this stage, no investment under review had reached the stage requiring notice to the Tel Aviv Stock Exchange (TASE), including an investment in Lumenis.
Salkind has previously bid for financially troubled companies, such as the Shekem retail chain, and appliance maker Elco Brandt. In other words, the acquisition of a company like Lumenis fits Salkind’s investment profile.
It seems that Lumenis’s troubled condition complicates transferring control in the company, because of its large debt to Bank Hapoalim (LSE: BKHD; TASE: POLI) ($190 million debt at the end of 2005). A sale of Lumenis will have to placate not just the buyer and seller as in the usual case, but a three party as well.
The third party in a sale is Bank Hapoalim to which, as noted above, Lumenis owes $190 million. The debt comes from Lumenis’s acquisition of Coherent Inc. (Nasdaq: COHR) five years ago. Lumenis’s debt grew by $1.9 million during 2005, and the company now has $14.1 million in cash and an unused credit line of $19.1 million. The debt to Bank Hapoalim has been a millstone around the company’s neck for five years, and financing this debt is the main reason why it is unable to make a net profit.
When Lumenis announced its compromise with the US Securities and Exchange Commission (SEC), assessments grew that the company had agreed to delist its shares from trading in part to try to negotiate a sale far from the eyes of shareholders. Lumenis has been traded on the Pink Sheets for the past two years. Its share has plummeted 32% since the announcement of the compromise, and is now trading at a level reflecting a market cap of $63 million.
Published by Globes [online], Israel business news - www.globes.co.il - on March 14, 2006
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