Eitan Eldar heads EEH Ventures, which has brokered sales of thousands of London housing units.

Eldar’s EEH invests in real estate development projects, generating value through the experience and professional know-how of its people in designing, financing, and managing projects.

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Yishal is a company that holds about one-third of the shares of New Pharm. The company collapsed in the last few months of 2012 and from this period it has been in contact with the bondholders in order to come to a debt agreement. The Yishal Company also has a collateral deposit at Bank Leumi valued at 4.2 million NIS. In addition to this, the company holds approximately 50 percent of the shares of Kamin Real Estate. Kamin holds approximately fifty percent of a real estate company from Latvia, which is in possession of two assets, land in the city of Jūrmala and another asset under lien in Riga. Kamin has also placed its assets under lien to Menorah Mivtachim, in exchange for another loan, but it was unable to comply with the terms and conditions and the loan was declared repayable immediately.

The company had 7 million NIS in cash in its coffers, and 1.85 million NIS were added to this after the sale of the company to the businessman and entrepreneur Eitan Eldar.

The significance of the purchase of a shelf company

A shelf company by definition is a company that has offered shares in the company to the public in the past, but currently, it does not perform any commercial activity or has very little activity. In such situations, new buyers can invest their money in order to become the owner of the company, and in this way cause the value of the shares of the company to rise. In certain cases, the buyer can enjoy significant tax breaks.
By purchasing a shelf company, one can enter the market without an initial public offering, subject to high costs. In this manner, companies that want to recruit capital in the stock market at sums that are below the minimum for initial public offering, can buy a shelf company and inject their activity into them. Afterward, they can recruit capital on the stock market.

The businessman Eitan Eldar is a highly recognized figure in the financial markets. As a part of his activity in the finance market, Eitan Eldar performs brokerage deals for private and institutional investors through the “Arena Capital” company, which he owns.

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Eitan Eldar explains that the goal in these covenants is to maintain a healthy financial behavior, as reflected in the financial reports. The interest of the borrower is to fulfill the covenants, because his success depends on the loan given to him. Failure to fulfill conditions leads to a threat to the business.

For instance, the lender can demand immediate repayment of debt or payment by guarantors. In some cases, says Eitan Eldar, the lender party and the borrower sign a new deal with other conditions that are considered inferior to the borrower. When a company does not fulfill the covenants set, the behaviour of the banks and the public is affected, especially the company’s shares.

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In this situation, the bank would like covenants. These covenants are certain conditions in the loan agreement guaranteeing the loan funds will be returned to the bank at the end of the process. The purpose behind the conditions is to keep the buyer so that he could return the money loaned from the bank.

These are actually financial standards that include some limitations, such as maintaining the the amount of personal capital. Once the purchaser does not meet the conditions, the loan will be immediately due and payable.

Eitan Eldar emphasizes that the bank and the buyer are not related to the company. The entity that has a relationship with the bank is the only buyer. The company can continue its current operations as usual.

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There are several factors that affect the risk level in investments. One of them is the level of trade in stocks in a portfolio. Eitan Eldar says that usually, high level of trade will lead to a higher risk level. Just because of the greatest risk, many investment portfolios include bonds (A way of reducing the level of risk) and high investment diversification, which further reduces the risk. Solid investments can have foreign currency certificates of deposit, government bonds, and more.

Investment in mutual funds, stocks, options and exchange traded notes are high-risk. So should dispel them right between Israeli shares, the shares of developing countries and developed countries.

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• Raising capital – If a company (or private businessman) purchase more than 50 percents of the shares belong to the shelf company, it becomes the controller over the cash reserve of the company. The purchasing party can sthenghten the value of its money and raise capital by offering bonds or allotting stocks.
• Purchasing private companies – Owning a shelf company, explains Eitan Eldar, is a basis for parties interested to purchase private companies and merge with them. This process can increase the value of securities for the investors.
• No need in regulation – People acquire and merge with shelf companies also because there is no need in regulation of minumal recruitment.

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• Becoming a public company – Private company that wants to become public can reduce the cost of public offering by purchasing a shelf company, merge with it and perform a reverse merger. The shelf company is almost empty of content and the purchasing company pours its content into it. Eitan Eldar adds that this is a way to increase the number of potentional investors.
• Savings in the offering process – This process of acquiring a shelf company and pouring into it the new content, saves money in the offering of securities in comparison to initial public offering. It is also a cheap way.

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What is an “asset”? Eitan Eldar explains that asset can be: businesses, reputation of a company, securities, etc. In Israel, this kind of tax is imposed also on real estates assets, and called “Mas Shevach”.

In Israel, there is a difference between the working population and the wealthy. While the first pay an income tax rate that can reach 48 percent, the latest who own capital pay tax at rate of 30 percent. The country claims that there isn’t any discrimination – because the wealthy pay double tax – one for the capital of the company and one for the dividends of the company. Together, these taxes reach up to 50 percents.

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In 2012-2013, he has become the wealthiest person in England – Because his wealth raised by almost 1 Billion pounds – to 13.3 billion. Eitan Eldar adds that Usmanov is the wealthiest person in Russia – according to Forbes magazine.

One can be surprised thad Usmanov is not the controlling shareholder of “the gunners”, but the controlling shareholder is Stan Kroenke – businessman from America who, according to estimates, has a general wealth of 3 billion dollars or more. Kroenke controls about two-thirds of Arsenal today.

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1. Interest in turning the company into private – Eitan Eldar tells that here, the controlling shareholder of a company removes it from the public market. He submits a tender offer which is higher than its market price. When the other shareholders are considered 95 percent of a company and agree to the offer, he can oblige the remaining shareholders to sell their shares as a part of this offer.
2. No controlling block in the company – Another scrnario, as points out Eitan Eldar, happens when there isn’t any controlling block. In order to get more than 25 percent of the company, a tender offer is needed for 5 percent, in order to achieve 30 percent. Then, it is possible to purchase up to 44.9 percent, and again perform a tender offer for 5 percent – to get 50 percent.

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