BSD.L Regulatory News (BSD)

EMBLAZE LTD (LSE:BLZ) ("Emblaze" or the "Company") Company Update Herzeliya, Israel, 27 November 2013. Capitalised terms will have the meanings ascribed to them in the Company'sannouncements of 4 November 2013, 11 November 2013 and 13 November 2013, asapplicable. Further to the Company's announcements of 4, 11 and 13 November 2013, IDByesterday announced as follows. Filing of a revised Proposal On 26 November 2013, IDB submitted to the Court a revised Proposal (the"Revised Proposal") backed by the Consortium. Below is a summary of the mainchanges introduced by the Revised Proposal. Pursuant to the Revised Proposal, the Consortium will invest in IDB and pay theIDB creditors in cash between NIS 1,518,000,000 and NIS 1,818,000,000(depending upon which alternative a creditor decides to accept) based on an IDBvaluation of NIS 1,318,000,000 (the "Valuation"). Under the cash and sharesalternative, IDB Creditors will receive an amount of IDBD shares. At Closing, the Consortium will pay NIS 1,018,000,000 (the "Closing Payment")as follows: In the event that the Clal Closing occurs by 1 June 2014, then, out of theClosing Payment, NIS 200,000,000 will be paid to IDBD and NIS 818,000,000 willbe paid to the IDB creditors. In addition, the IDB creditors will receive IDBDshares amounting to 32.9% of its issued share capital (with the remaining 67.1%to be held by IDB). In the event that the Clal Closing does not occur by 1 June 2014, out of theClosing Payment, NIS 700,000,000 will be paid to IDBD and NIS 318,000,000 willbe paid to the IDB creditors, who will also receive additional IDBD sharesamounting to an additional 16.6% of its issued share capital(with the remaining50.5% to be held by IDB). In order to provide for such mechanism, certain funds will be put into escrowat Closing by the Consortium. Out of such funds, upon Closing (or on 15February 2014, if later) the Consortium will lend an amount of NIS 500,000,000to IDBD, as a first-ranking loan (ranking above the IDB creditors) for up to aperiod of up to 6 months, bearing annual interest equal to 5% per annum andsecured on IDB's shares in IDBD. Cash and shares alternative Furthermore, between NIS 500,000.000 and NIS 540,000,000 (the "Post-ClosingPayment", and together with the Closing Payment, the "Payment") will be paid tothe IDB creditors within 36 months of Closing, of which at least NIS 90,000,000will be paid within 3 months of Closing, NIS 180,000,000 will be paid within 12months of Closing and NIS 360,000,000 will be paid within 24 months of Closing,all by way of tender offers to be made by Newco at a price per share based onthe aggregate of the amount of the Valuation plus all amounts paid into IDBD bythe Consortium. Cash alternative Each IDB creditor will be granted an option to elect for a cash alternative(the "Cash Alternative"), whereby the Closing Payment of NIS 1,150,000,000 canbe increased as follows. Each IDB creditor choosingthis alternative will be paid (i) at Closing, out ofthe Closing Payment, its pro rata proportionof an amount equal to up to NIS450,000,000 of the Closing Payment (depending on the percentage of IDBcreditors electing for this alternative, as further explained below); and (ii)in the event that the Clal Closing does not occur by 1 June 2014, then, withinone year from Closing, its pro rata proportion of an amount equal to up to NIS168,000,000 (depending on the percentage of IDB creditors electing for thisalternative, as further explained below)plus 7% annual interest as from 1 June2014; or (iii) in the event that the Clal Closing does occur by 1 June 2014,then, its pro rata proportion of an amount equal to up to NIS 668,000,000(depending on the percentage of IDB creditors electing for this alternative, asfurther explained below), in 4 annual instalments starting from the firstanniversary of Closing, plus 7% annual interest as from 1 June 2014. The exact amounts which will be paid to the IDB creditors electing for the CashAlternative will be equal to the sum of such maximum amounts payable to the IDBCreditors electing for the Cash Alternative multiplied by the aggregate debtowed to the IDB creditors electing for such alternative divided by theaggregate debt owed to all IDB creditors. The required adjustments will be madeto the pro rata holdings of the IDB creditors in IDBD based on the percentageof debt held by IDB creditors electing the Cash Alternative. IDB Creditors mayonly elect for the Cash Alternative in respect of50% of the aggregate debt owedto them. Pursuant to both alternatives, the IDB creditors will also be granted IDB'scash reserves (minus certain expenses) and any net amounts which IDB mayreceive as a result of legal proceedings to which it is or may be a party, thebasis of which predates Closing. The Consortium has undertaken to act in orderto register IDBD's shares for trading or immediately following Closing. Both alternatives include a penalty mechanism in case the Consortium fails topay the Closing Payment in full, whereby the IDB creditors may elect, as anexclusive remedy (to the exclusion of all other remedies), for one of thefollowing: (i) enforcement of the debt plus a penalty by means of a transfer ofIDBD shares in an amount equal to 125% ofthe shortfall amount divided by theIDBD post-money share value; or (ii) rescission and liquidated damages in anamount of NIS 100,000,000; or (iii) any other remedy available under law. In addition, both alternatives include a penalty mechanism in case theConsortium fails to pay the Post-Closing Payment in full, whereby the IDBDcreditors will receive IDBD shares in an amount equal to 50% ofthe shortfallamount divided by the IDBD post-money share value. In order to secure suchundertaking, the Consortium will pledge in favour of the IDB creditorssufficient IDBD shares. Addition of the Nakash group to the Consortium The Nakash group, through a wholly-owned private company, has joined theConsortium. The Nakash group holds the majority stake in Arkia Airlines Ltd.and the Eilat seaport, as well as other interests in hotels,textile factoriesand real estate, both in and outside of Israel. The Nakash group has undertaken to invest NIS 250,000,000(the "NakashInvestment") in connection with the Proposed Transaction, of which NIS200,000,000 will be paid upon Closing and the remaining NIS 50,000,000 will bereserved for the purpose of executing the tender offers pursuant to the RevisedProposal (the reserved amount shall be deposited by the Nakash group with atrustee, 21 days in advance of the payment date, provided, however, that atender offer pursuant to the Revised Proposal is completed no earlier than twoyears from Closing). To secure its obligation with respect to the reservedamount, the Nakash group will, upon Closing, transfer into trust such number ofIDBD shares,the value of which is equal to NIS 25,000,000,which will serve ascompensation in case the Nakash group fails to meet its obligations withrespect to the tender offers. The Nakash group has undertaken to deposit into the Designated Escrow an amountof NIS 100,000,000 by28 November, 2013. The remaining initial investment in theamount of NIS 100,000,000 will be deposited no later than 21 days prior toClosing. Following the addition of the Nakash group to the Consortium (the "RevisedConsortium"), the Company will maintain the right to appoint the majority ofdirectors ofthe boards of directors of all the IDB Group companies. The Nakashgroup was granted the right to appoint two directors in IDB, IDBD or anothercompany designated for the purpose of the Proposed Transaction, as the case maybe), as long as it holds at least 75 per cent. of the shares originally issuedto it on Closing, or a right to appoint one director in the event that itholdsat least 50 per cent of the shares originally issued to it on Closing. Except as detailed below, the agreement with the Nakash group provides forsimilar terms to those entered into with the other Consortium members,including the grant of a put option by Newco (exercise of which is guaranteedby the Company) in relation to the Nakash group holding in IDB (includingconvertible bonds), althoughthe exercise price of theoption granted to theNakash group shall a floating rate of interest linked to the Israel index (suchindex linkage limited to 3 per cent. for the entire period until the date ofthe option exercise). In addition, if the Proposed Transaction is implementedby the Consortium through a company designated for the purpose of the ProposedTransaction (the "SPV") instead of through IDB, as Newco is entitled to direct,then the Nakash group will have the option to be issued IDBD shares instead ofsharesin the SPV (in which case, the provisions of the Newco shareholdersagreement will apply in relation to the Nakash group, subject to the applicablechanges and, in addition, the IDBD shares held by the Nakash group may not betransferred by it for a period of 3 years from Closing). Furthermore, as part of the agreement following the addition of the Nakashgroup to the Revised Consortium: (i) should additional amounts be invested for the purposes of the RevisedProposal, Newco's minimum investment as part of the Proposed Transaction willbe NIS 510,000,000; (ii) should the Nakash group's involvement in the Proposed Transaction lead toantitrust requirements for IDB or the Nakash group to dispose of assets in thetourism or aviation sectors, the Revised Consortium will do the maximumpossible under law, to dispose of IDB's assets (either by transfer into trustor by sale) and under no circumstances, will the Nakash group be required todispose of such assets; (iii) the current IDB shareholders will retain 6.25% of the issued sharecapital of IDB at Closing (and a pro rata share of any entity established bythe Revised Consortium for the purposes of implementing the ProposedTransaction), subject to such pro rata dilution if the Proposed Transaction isundertaken with an investment of more than NIS 1,170,000,000; (iv) if the Proposed Transaction is implemented through the SPV, then eachmember of the Revised Consortium will be allocated a number of shares in IDBDheld by the SPV, pro-rata to such Revised Consortium member's investment in theRevised Consortium. Such shares shall be held on trust and be subject to acharge in favour of such member of the Revised Consortium (or its nominee),such charge not to be enforced other than in accordance with the agreementbetween the members of the Revised Consortium. Each member of the RevisedConsortium shall be entitled to purchase his allocated IDBD shares at a pricebased on the Valuation, upon the earlier of: (A) 3 years from Closing; (B) uponthe SPV holding 51% or more of the shares in IDBD (in which case, each memberof the Revised Consortium shall be entitled to purchase a pro rata share of anysuch excess above 51%); and (C) upon any dissolution, liquidation or similarevent in relation to the SPV; and (v) Mr. Daniel Jusidman shall be entitled to increase his investment in theProposed Transaction by NIS 30,000,000 (in addition to the NIS 90,000,000already deposited in trust). Withdrawal of the Neto group from the Consortium The Neto group had decided to withdrawal from the Consortium and as aconsequence the amount of NIS 135,000,000 which was deposited by it into theDesignated Escrowwill be returned to it. Following the investment by the Nakash group and the withdrawal of the NetGroup, the amount of funds available for the Proposed Transaction and held inthe Designated Escrow by on behalf of the Consortium is NIS678,400,000. The Company will continue to notify shareholders of any updates with regard tothe Proposed Transaction and/or any material changes to the terms of itsProposal by issuing further announcements via PRN, a Regulatory InformationService. All such announcements may also be viewed at the same time on theCompany's website at www.emblaze.com. In the event the Revised Consortium'sProposal is successful, the Company will prepare the appropriate documentationproviding more details on the Company, as enlarged by the IDB Group, and theCompany's investment in IDB. Enquiries: Hagit Gal, Emblaze hagit.gal@emblaze.comThe Emblaze Group is traded on the London Stock Exchange (LSE: BLZ) since 1996.www.emblaze.com.