BSD.L Regulatory News (BSD)

Emblaze Ltd (LSE:BLZ) ("Emblaze" or "the Company") Further Company Update Director and Substantial Shareholder Dealing, Board Changes, Proposed Transaction and Share Suspension Herzeliya, Israel, 15 August 2013 Director Dealing The Company has been notified that Naftali Shani yesterday disposed of7,741,392 shares in the Company (the "Initial Shani Shares") (comprising 7.04per cent of the Company's issued share capital (excluding treasury shares) toBGI Investments (1961) Ltd. ("BGI") at a price of £0.75 per share. In addition: * in consideration for the payment by BGI of US$500,000 (the "Shani Call Option Consideration"), Mr Shani has granted to BGI a call option (the " Shani Call Option") providing BGI with the ability to acquire the remainder of Mr Shani's holding of shares in the Company (comprising 7,741,392 shares, representing 7.04 per cent of the Company's issued share capital (excluding treasury shares) (the "Shani Option Shares")) for £7,067,891 (equating to a price per Shani Option Share of £0.913) together with an additional payment of £1,261,847 in respect of the Initial Shani Shares (equating to a price per Initial Share of £0.163), less the Shani Call Option Consideration. The Shani Call Option is exercisable by BGI within a 36 month period and assignable to third parties; * BGI has granted Mr Shani with a put option (the "Shani Put Option") providing Mr Shani with the power to obligate BGI to acquire the Shani Option Shares: + to the extent that the Shani Put Option is exercised between a 6 month and 24 month period, for £6,425,355 (equating to a price per Shani Option Share of £0.83) together with an additional payment of £619,311 in respect of the Initial Shani Shares (equating to a price per Initial Share of £0.08); and + to the extent that the Shani Put Option is exercised between the 25 month and 40 month period from the date hereof, for £6,746,623 (equating to a price per Shani Option Share of £0.8715) together with an additional payment of £940,579 in respect of the Initial Shani Shares (equating to a price per Initial Share of £0.1215). The Shani Put Option shall only be capable of exercise by Mr Shani between the6 month and 40 month periods. As security for the rights granted to BGI pursuant to the Shani Call Option,and conditional upon the success of a special tender offer which the Companyunderstands BGI proposes to make with respect to the acquisition of furthershares of the Company, Mr Shani has also granted an irrevocable power ofattorney (subject to the success of such special tender offer) pursuant towhich BGI or its representative shall be permitted to vote at any meeting ofthe Company with respect to the Shani Option Shares held during the period ofthe Shani Call Option. The power of attorney may also take effect immediatelyupon any assignment of the Shani Call Option by BGI to a third party, in favourof such third party. BGI have also agreed to make certain additional payments to Mr Shani to theextent the Company is successful in collecting payments in connection withcertain intellectual property rights in the next seven years. In addition, MrShani would also be entitled to certain additional payments to the extent theCompany is successful in collecting payments in connection with certain claimagainst HM Revenue & Customs. Mr Shani has agreed to permit BGI to withholdfrom any future amounts owing to him by BGI as part of such contingent payments(subject to a cap of US$5m) to the extent that the Company suffers a monetarycharge which is debited to the Company in the next seven years due to a causewhich was created prior to the sale of his shares yesterday. Mr Shani'sparticipation in future payments, as well as and any amount which could bewithheld from such payment due to him, would be calculated based on Mr Shani'spro rata holdings in the Company prior the sale of his shares yesterday. In addition, BGI has undertaken to use its best endeavours to bring to theapproval of the Company a consultancy agreement with Mr Shani, under which hewill provide services to the Company in relation to patent litigation andhigh-tech, in light of his experience and expertise. Mr Shani has been provided with certain guarantees by BGI and third parties inorder to secure its obligations towards him. Substantial Shareholder Dealing The Company has also been notified that Fortissimo Capital Management Ltd. ("Fortissimo") yesterday disposed of 9,899,123 shares in the Company (the "Initial Fortissimo Shares") (comprising 9 per cent of the Company's issuedshare capital (excluding treasury shares) to BGI at a price of £0.75 pence pershare. In addition: * in consideration for the payment by BGI of US$500,000 (the "Fortissimo Call Option Consideration"), Fortissimo has granted to BGI a call option (the " Fortissimo Call Option") providing BGI with the ability to acquire the remainder of Fortissimo's holding of shares in the Company (comprising 8,883,757 shares, representing 8.08 per cent of the Company's issued share capital (excluding treasury shares) (the "Fortissimo Option Shares")) for $13,290,150 less the Fortissimo Call Option Consideration (equating to a price per share, when taken with the Fortissimo Call Option Consideration, of $1.55). The Fortissimo Call Option is exercisable by BGI within a period of 24 months; * BGI has granted Fortissimo with a put option (the "Fortissimo Put Option") providing Fortissimo with the power to obligate BGI to acquire the Fortissimo Option Shares for $11,388,370 (equating to a price per share of $1.28). The Fortissimo Put Option shall only be capable of exercise by Mr Shani between a 6 month and 36 month period. As security for the rights granted to BGI pursuant to the Fortissimo CallOption, and conditional upon the success of a special tender offer which theCompany understands BGI proposes to make with respect to the acquisition offurther shares of the Company, Fortissimo has also granted an irrevocable powerof attorney (subject to the success of such special tender offer) pursuant towhich BGI or its representative shall be permitted to vote at any meeting ofthe Company with respect to the Fortissimo Option Shares held during the periodof the Fortissimo Call Option. The power of attorney may also take effectimmediately upon any assignment of the Fortissimo Call Option by BGI to a thirdparty, in favour of such third party. BGI have also agreed to make certain additional payments to Fortissimo to theextent the Company is successful in collecting payments in connection withcertain intellectual property rights in the next seven years. Fortissimo'sparticipation in future payments would be calculated based on 50% of its prorata holdings in the Company prior the sale of its shares yesterday. Information on BGI and intentions for Emblaze BGI is a holding company which seeks to make certain investments. Until 2011,BGI had two main areas of focus, financing and textiles, and was thecontrolling shareholder of BAGIR Group Ltd. a leading Israeli fashion company. In August 2012, Mr Alexander Granovsky acquired a controlling interest in BGIfrom Mr Zvika Barinboim, and from that time on the company has been activelyseeking investments. In July 2013 BGI sold all its remaining holdings and became a cash shell. The Company also notes today's announcement by BGI on the Tel-Aviv StockExchange which notes that: * in addition to the dealings referred to above, BGI has also acquired further shares in Emblaze such that it currently holds 20.01 per cent. of the issued share capital of Emblaze (excluding treasury shares); * BGI intends to enter into discussions with another shareholder of Emblaze with respect to the potential purchase of an additional 2.5 per cent. of the issued share capital of Emblaze; and * BGI intends to issue a special purchase offer, as defined under the Israeli Companies Law, 1999 and the Securities (Purchase Offer) Regulations, 2000 to purchase an additional 5 per cent. of the issued share capital of Emblaze at a price per share of £0.75 for a total consideration of up to approximately US$6.3 million. There can be no guarantee that a special purchase offer will be made by BGI, or that the terms of such offer reflect those set out above. As a consequence, the Company notes that taken together with its current 20.01per cent. holding in the Company, should (i) BGI successfully complete anyspecial purchase offer on the terms referred to above, (ii) the put and/or calloptions entered into with Mr Shani and Fortissimo be successfully exercised and(iii) certain other put and call options entered into by BGI with othershareholders of Emblaze also be successfully exercised, this would lead to BGIholding approximately 46.6 per cent. of the issued share capital of Emblaze. Board Changes The Company announces the following appointments to the board of directors ofthe Company which took effect on 14 August 2013: * Abraham Wolff as Chairman, * Israel Jossef Schneorson and CEO as Vice Chairman, * Amnon Ben-Shay as Non-Executive Director, * Yosef Schvinger as Non-Executive Director and * Chanoch Winderboim as Non-Executive Director. Mr Wolff currently serves as a board member of B.G.I Investment (1961) Ltd, anIsraeli public company and as the chairman of Z.B.I Ltd, an Israeli holdingcompany. Mr Wolff also serves as a Rabbi of Odessa and Southern Ukraine and isa director of Odessa's Jewish community institutions. Mr Schneorson currently serves as a board member and the executive manager ofB.G.I Investment (1961) Ltd, an Israeli public company and Z.B.I Ltd, anIsraeli holding company. Mr Schneorson is also serves as a financial adviser toMr. Alexander Granovsky. Mr Ben-Shay currently serves as a board member and the executive manager ofB.G.I Investment (1961) Ltd, an Israeli public company and has previouslyserved as a board member of Azorim Ltd, one of Israel's leading residentialconstruction and commercial real estate companies. Mr Ben-Shay currently servesas the CFO of Is-Line Import Export Services Ltd, an international courier andcustoms services company. Mr Ben-Shay holds an MBA in banking and finance, anda B.A in economics, majoring in business administration, both from the HebrewUniversity of Jerusalem and studied accounting at the College of ManagementAcademic Studies. Mr Shvinger has previously served as a director of Boymelgreen Capital Limited,a public Israeli company, and as a CEO of the company of the development ofholy places in Israel, an Israeli governmental company. In the past decade, MrShvinger was elected as the Mayor of Modi'in Elit local council. Prior toserving as a Mayor, Mr Shvinger acted as a member of the administration of thedevelopment of Modi'in Elit local council towns, as a senior counsel to theMinister of Internal Affairs of Israel and as a senior advisor of the CEO ofthe Ministry of Internal Affairs of Israel. Mr Winderbaum currently serves as a board member and the executive manager ofZ.B.I Ltd, an Israeli holding company and has experience in the field ofreal-estate transactions. Mr Winderbaum received a LL.B from Shaarei MishpatCollege, and LL.M from Bar-Ilan University. Director resignations At the same time, the Company also announces the resignation of Naftali Shani,Yuval Cohen, Shmuel Barashi, Ilan Flato and Hagit Gal from the board ofdirectors with effect from 14 August 2013. Proposed Transaction The Company further announces that following the acquisition by BGI Investments(1961) Ltd. of approximately 20 per cent. of the issued share capital of theCompany, the related changes to the board of directors and a resolution adoptedlast night by the Company's reconstituted board of directors, a letter wassubmitted last night to IDB Holdings Corporation Ltd. ("IDB") on behalf of theCompany and Netz Group Limited ("Netz Group") proposing the investment (the "Proposal") by Emblaze and Netz in IDB pursuant to the terms of which they wouldsubscribe NIS826,000,000 for new shares in IDB constituting at least 80 percent. of the issued share capital of IDB post-investment (the "ProposedTransaction"). IDB is one of Israel's largest holding companies, and it invests, throughinvestee companies, in companies that are engaged in various sectors of theIsraeli economy and overseas. It is an Israeli resident incorporated in Israel.The securities of IDB are listed on the Tel Aviv Stock Exchange (IDBH.W8). After creditors of IDB had submitted several insolvency petitions against itand as part of such proceedings, IDB applied to the Tel Aviv District Court inaccordance with Section 350 of the Israeli Companies Law, 1999, in an attemptto reach an arrangement with its creditors. As part of such court proceedings,on 7 July 2013, IDB submitted an outline for a scheme of arrangement. TheProposal is intended to be carried out as part of the potential implementationof such outline scheme of arrangement. There is no certainty that such outlinescheme of arrangement will be approved by the court and a decision of the courtis expected within the coming days whether to allow IDB to proceed based onsuch outline scheme of arrangement or whether to adopt an alternative outlineproposed by creditors for a distribution in kind of IDB assets. The Proposal made last night to IDB on behalf of the Company and the Netz Groupis conditional upon, inter alia, the following: * the approval of the current shareholders of IDB; * the Company, the Netz Group and Nr Nochi Dankner formalising their relationship in connection with the Proposal (see further below); * the approval of the proposed investment by shareholders of Emblaze; * the fulfilment of certain conditions precedent set out in the outline scheme of arrangement published by IDB on 7 July 2013; * on completion of the proposed investment: + IDB having no liabilities towards its financial creditors; + IDB holding no less than 50 per cent of the issued share capital of IDB Development Corporation Ltd ("IDBD"), currently a wholly owned subsidiary of IDB; and + the current proceedings issued in the Tel Aviv District Court by IDBD bondholders in connection with IDBD debts being discontinued. The Company proposes to incorporate a new company, to be owned as to 70.3 percent. by Emblaze and as to 29.7 per cent. by Nochi Dankner, the currentcontrolling shareholder of IBD, in order to make its investment in IDBalongside the Netz Group. Of the NIS826,000,000 proposed to be invested in IDB,it is proposed that Emblaze invest (through the new company) NIS743,400,000 andthe Netz Group would invest NIS82,600,000. The Company currently intends tofund its investment in the new company of NIS500,000,000 by way of shareholderloan, with the remainder being funded by the new company from additionalsources. The Company, Nochi Dankner and the Netz Group are currently negotiating a setof agreements which would govern their relationship with regard to the proposedinvestment and as shareholders of IDB, subject to successful completion of theProposed Transaction, including with regard to voting in shareholders meetings,appointment of directors in the IDB group, rights of first refusal, tag alongrights, put options etc. There can be no guarantee that the Company will reach agreement with NochiDankner and the Netz Group as to their arrangements or that any investment willbe made in IDB on the terms set out in the Proposal or at all. The Company willupdate the market in due course. Share suspension The proposed investment by the Company in IDB would constitute a reversetakeover under the rules of the UK Listing Authority and after consultationwith the UK Listing Authority, Emblaze's shares have been temporarily suspendedpending the publication of sufficient information on the Proposed Transactionand the agreement of the UK Listing Authority, or termination of discussions inrespect of the Proposed Transaction. Enquiries: Piers Coombs / Tim Redfern / Kit Stephenson +44 20 7523 8000 Canaccord Genuity Ltd Emblaze is traded on the London Stock Exchange (LSE: BLZ) since 1996.

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