EXHIBIT 2
[TRANSLATION]
INDUSTRIAL DEVELOPMENT BANK OF ISRAEL LTD.
April 30, 2008
TEL AVIV STOCK EXCHANGE SECURITIES AUTHORITY
www.tase.co.il www.isa.gov.il
IMMEDIATE REPORT OF AN EVENT OR MATTER DEVIATING FROM THE
COMPANY'S REGULAR COURSE OF BUSINESS
Subject of the Event: Resolution of Ministerial Committee for Privatization
Matters
1. The Ministerial Committee for Privatization Matters arrived at a resolution
on April 29, 2008, regarding the privatization of the Bank. The text of the
resolution and also the text of a Letter of Principles dated March 18, 2008
mentioned in the resolution (including the Letter of Consents, which is an
annex to the Letter of Principles) is attached hereto (as reported to the
Bank, the Letter of Principles and the Letter of Consents were signed by
the parties to the Letters, except the three banks, who did not sign on the
Letter of Principles. The law firm of Efrati Galili signed both documents
in the name of Excellence Formerly Mizrachi Funds Ltd., Prisma Investments
Ltd., Harel Insurance Company Ltd., Menora Insurance Compamy Ltd., Clal
Insurance Company Ltd. Isal Ltd. and Helman Aldubi Ltd., which are
management companies that hold a portion of the C and CC shares of the Bank
in trust for members of provident funds, and Mr. Nissim Cohen signed the
Letter of Principles in the name of approximately 30% of the Preferred
Ordinary shares of the Bank.
2. The date and time when the Company was first made aware of the event or
matter:
April 29, 2008 at 2:00 P.M.
April 29, 2008
RESOLUTION OF THE
MINISTERIAL COMMITTEE FOR PRIVATIZATION MATTERS
REGARDING THE PRIVATIZATION OF
THE INDUSTRIAL DEVELOPMENT BANK OF ISRAEL LTD.
Resolved:
Further to Government Resolution No. 2492 from September 1, 2002 and Government
Resolution No. 741 from August 21, 2003 and Government Resolution No. 4324 from
October 26, 2005:
1. The shares of the State of Israel in the Industrial Development Bank
Ltd. ("the Bank") shall be sold, as a single unit, by way of a private
sale, to an investor or a group of investors from Israel and/or abroad
("the Purchaser") and this as part of a comprehensive sale blueprint
for the transfer of all of the shares of the Bank, including those
held by the public, to the Purchaser, as set forth below ("the Sale").
2. Governmental entities, including governmental companies, governmental
subsidiaries and "mixed" companies, shall not be permitted to
participate in the sale process, directly or indirectly, alone or
jointly with others.
3. Until the completion of the sale, the Bank shall continue to collect
its credit portfolio.
4. ARRANGEMENT BETWEEN THE SHAREHOLDERS
a. Based upon a letter of principles signed between shareholders of
the bank on March 18, 2008, the Bank shall submit a motion to
approve an arrangement, pursuant to Paragraph 350 of the
Companies Law-1999 ("the Companies Law", "Arrangement pursuant to
Paragraph 350"). Pursuant to the arrangement, among other things,
the Purchaser shall purchase all of the Preferred C shares,
Preferred CC shares, Preferred CC1 shares ("Group C shares") and
Ordinary Preferred shares of the Bank, traded on the Tel Aviv
Stock Exchange Ltd. ("the Stock Exchange") and these shares shall
be removed from trading on the Stock Exchange. In addition, the
Purchaser shall purchase, within the framework of the Arrangement
pursuant to Paragraph 350, all of the Ordinary A shares and all
of the various shares held by the State of Israel.
b. According to the Arrangement pursuant to Paragraph 350, the Bank
shall redeem, pursuant to the terms in their offering prospectus,
the D and DD shares of the Bank, not held by the State of Israel.
c. As a condition for the approval and execution of the arrangement
between the shareholders, the shareholders of the Bank, of all
the classes, in their capacity as shareholders, shall waive their
claims against the Bank, the officers of the Bank, the employees
of the Bank, the controlling shareholders of the Bank and the
interested parties of the Bank, as these terms are defined in the
Companies Law. In addition, the Bank and Group C shareholders
shall waive all claims against the State of Israel concerning the
perpetual deposit and the return of the deposit to the Bank.
d. The Bank shall pay, at the time of the execution of the
Arrangement pursuant to Paragraph 350, or until December 31,
2008, or at a later date approved by the Bank of Israel for the
extension of the line of credit, the full amount of the special
line of credit made available to the Bank by the Bank of Israel
in the year 2002.
The Bank shall not pay any amount from the perpetual deposit to
any third party, prior to the full payment of the special line of
credit to the Bank of Israel. Pursuant to the aforesaid, the Bank
shall act in coordination with the Accountant General and the
Governmental Companies Authority, to defer the payment of the
special line of credit made available by the Bank of Israel, and
also to extend the guarantees of the Bank and of the State of
Israel given to the Bank of Israel to insure the return of the
monies.
5. To authorize the Accountant General to carry out the following acts in
order to facilitate the execution of this resolution:
a. To return to the Bank, until July 31, 2008, or until the date of
the approval by the court of the Arrangement pursuant to
Paragraph 350, whichever is later, the perpetual deposit
deposited by the Bank with the Accountant General, including
linkage differentials pursuant to the agreements between the
State and the Bank concerning the perpetual deposit ("the
Agreements"). The Accountant General, in coordination with the
Governmental Companies Authority ("the Authority") and the Bank,
may decide that the proportionate amount of the perpetual deposit
from the consideration paid for the D and DD shares held by the
public shall be returned to the Bank at the time of the return of
the perpetual deposit as aforementioned, or at another time, at
the latest, proximate to the date of the execution of the Sale or
the liquidation of the Bank. As a condition for the return of the
perpetual deposit, it shall be insured, to the satisfaction of
the Accountant General, that the deposit monies shall be used by
the Bank, as first priority, to pay the balance of the special
line of credit made available to the bank by the Bank of Israel.
b. To pay to the Bank, for the purpose of redeeming Preferred D
shares and Preferred DD shares not held by the State:
1. Interest on the perpetual deposit equal to the amount of the
accumulated dividend not paid to the shareholders of
Preferred D shares and Preferred DD shares, except the State
of Israel, from July 1, 2002 and until the date of the
redemption of the shares.
2. A premium in the amount of 5.625% of the par value of the D
shares not held by the State.
3. The interest and premium shall be paid to the Bank in a
grossed-up manner as set forth in the Agreements such that
the net amounts that shall remain with the Bank shall be
equal to the amounts it must pay to the shareholders.
c. To act so that the Bank shall transfer the unpaid balance of the
loan granted to the Israel Electric Company to the benefit of the
Accountant General or to another banking entity to be determined
by the Accountant General.
d. To act to conclude, to the extent possible, the commercial
relationship between the Bank and the State, and including loans
that the Bank granted with State liability and guarantee, an
accounting regarding expenses for capital notes and shares and
any other matter in the discretion of the Accountant General. The
aforesaid in this sub-paragraph shall not apply to deposits of
the State pertaining to loans not guaranteed by the State.
6. To authorize the Accountant General, together with the Authority, to
reach an agreement with the shareholders of the Bank, of all classes,
regarding the distribution of the consideration from the sale,
including taking into consideration the economic report of the expert
chosen (Prof. Amir Barnea), and to consolidate them in the arrangement
that the Bank shall submit pursuant to Paragraph 350.
7. To authorize the Authority to carry out in its discretion all the
necessary acts in order to execute this resolution, and including:
a. To prepare and/or to submit every document and/or information or
plan necessary in order to execute this resolution, including all
information concerning the activities, assets, rights and
obligations of the Bank.
b. To receive all the authorizations, approvals and arrangements
necessary in order to execute this resolution, including from the
Bank of Israel.
c. An application to court regarding any manner necessary in order
to execute the arrangement.
d. To conduct and execute the sale process, in all its aspects
including issuing instructions to the Bank pursuant to the power
granted to the Authority pursuant to the Government Companies
Law-1975.
e. To do any other act necessary to execute this resolution.
8. The employees of the Bank shall be paid a privatization remuneration
pursuant to the rules of the Authority. The remuneration shall be
given immediately after the Sale and subject to its execution.
9. This resolution also forms a governmental approval to all stated
therein, as necessary pursuant to the law.
March 18, 2008
LETTER OF PRINCIPLES
Following the proposed blueprint for the process of the sale of the shares of
the Industrial Development Bank of Israel Ltd. ("the Bank") ("Sale Blueprint")
(attached as Annex "A") the undersigned parties, holders of shares of various
classes of the Bank ,hereby declare that they consent to the implementation of
the Sale Blueprint and are willing to co-operate in its execution and the
transfer of the Bank shares to an entity to be selected by the representatives
of the State ( the Purchaser"), pursuant to the Sale Blueprint and the following
principles ( the Sale Blueprint and the following principles are complementary.
However in the case of contradiction between the Sale Blueprint and the
following principles, the hereinafter stated shall prevail).
1. The parties undertake to support all the processes necessary for the
execution of the Sale Blueprint and to take all actions required for
that purpose. Likewise the parties undertake to participate at the
ordinary and extraordinary meetings and class meetings of the Bank and
to vote by virtue of the Bank shares held by them in favor of the
execution of the Sale Blueprint whether by themselves and whether by
means of their agents.
2. The consideration which will be paid by the Purchaser shall be
distributed between the State and the shareholders of the Bank of the
various classes in accordance with the formulas for the distribution
of the consideration according to the share class, as detailed in
annex "f" to the report prepared by Prof. Amir Barnea ( "the
Expert")(attached as annex "B").
3. The parties confirm it being known to them that this document is
subject to receipt of the approvals under the Law, including the
decision of the Ministerial Committee for Privatization Matters,
approval of the privatization procedure by the Finance Committee of
the Knesset and approval by the court for the arrangement pursuant to
Section 350 of the Companies Law-1999, which will be submitted to the
court by the Bank ("the Arrangement").
4. The shareholders of the Bank will bear the payment of the fees of the
expert, each one proportionately to his share of the consideration to
be paid by the purchaser as determined by the expert. The State will
provide interim financing of the fees and the bearing of the
proportionate share shall also be submitted to the Court for approval
as part of the final arrangement. Payment of the expert's fees shall
be deducted from the consideration to be received under the Sale
Blueprint, taking into consideration the interim financing borne by
the State.
5. A condition to the coming into effect of this Letter of Principles is
the approval by the general meeting of the Bank of the Letter of
Indemnity and the Letter of Exemption of the officers of the Bank.
The Letter of Indemnity and the Letter of Exemption shall come Into
effect upon the submission of the arrangement to the court pursuant to
Section 350 of the Companies Law.
6. Subject to the fulfillment of all that stated in this document and its
annexes, which form an integral part hereof, the parties undertake not
to raise any contention or claim against a party to this document, or
anyone on his behalf, in respect of the execution of the Sale
Blueprint or its cessation, and provided that each party acted in good
faith in the execution of his undertakings pursuant to this document.
Signatures of the Parties:
- --------------- -------------------------------- ---------------
State of Israel Office of Advocate Efrati Galili Mr.Nissim Cohen
on behalf of the shareholders of on behalf of the
class C, CC of the Bank, detailed Shareholders of
in annex "C" attached. the Ordinary
Preferred shares
as detailed in
annex "C"
attached
- ------------------ --------------- ------------------
Bank Hapoalim Ltd. Bank Leumi Ltd. Bank Discount Ltd.
ANNEX "A"
LETTER OF PRINCIPAL CONSENTS BETWEEN THE STATE AND A PORTION OF THE HOLDERS OF
PREFERRED SHARES C', CC' AND CC'1 ("THE LETTER OF CONSENTSS WITH C' SHARES")
Following the Letter of Principles dated March 18, 2008 ("Letter of Principles")
between the shareholders of the Industrial Development Bank of Israel Ltd. (
"the Bank") , the parties reached the following consents ( the Letter of
Principles and the Letter of Consents with the C' shares, are complementary).
1. In the event that the sale to the Purchaser shall be finalized
pursuant to the proposed Sale Blueprint attached as annex "A" to the
Letter of Principles until December 31, 2009, then:
a. Within the framework of the arrangement it shall be set forth
that if the total consideration which shall be received from the
Purchaser is less than NIS 400 million, then the consent of the
State representatives to the finalization of the sale shall also
be subject to approval at the joint meeting of shareholders of
class C', CC' and CC'1 in a majority determined in Section 350 of
the Companies Law.
b. Within the framework of the arrangement it shall be set forth
that, subject to the actual payment of all the amounts due to
them in accordance with the Letter of Principles and this Letter
of Consents, the holders of Preferred shares C', CC' and CC'1
shall waive their claims and contentions, as shareholders of the
Bank, against the Bank, its Officers ,employees and interested
parties therein and against the State, including in relation to
payment of a dividend in respect of the period commencing July 1,
2002 and terminating on the date of the finalization of the sale,
or in connection with the perpetual deposit or its return to the
Bank.
2. The arrangement shall set forth that if for whatsoever reason the sale
has not been finalized pursuant to the Sale Blueprint until December
31, 2009 or a liquidation order was granted against the Bank or the
general meeting decided on a voluntary liquidation of the Bank (each
one of these: "Liquidation of the Bank") prior to this date:
a. The State shall pay the Bank 50% of the interest at the rate of
6% annually accumulating on the perpetual deposit in connection
with the Preferred shares C',CC' and CC'1 for the period
commencing July 1, 2002 until July 31, 2008. This amount shall be
paid on the date of liquidation of the Bank or on December 31,
2009, whichever shall be the earlier ("Date of Payment").
This amount shall bear linkage differentials and interest
according to the Interest and Linkage Settlement Law-1961
commencing July 31, 2008 and until the date of payment, which
shall be paid by the State on the date of payment. The payment by
the State shall be grossed-up pursuant to the agreements
regarding the perpetual deposit.
b. The Bank shall pay the holders of the Preferred shares C',CC' and
CC1' on the date of payment a dividend at the rate of 50% of the
Preferred accumulating dividend at the rate of 6% annually which
accumulated on their shares for the period from 1.7.02 until
31/7/08 together with linkage differentials and interest
according to the Interest and Linkage Settlement Law-1961,
commencing from July 31, 2008 and until the date of payment.
c. The State waives its claims and contentions against the Bank
and/or the liquidator of the Bank in relation to the payment of
50% of the dividend to the State as holder of Preferred shares D
and DD, for the period commencing July 1, 2002 and terminating on
July 31, 2008.
d. Subject to the payment of all the amounts due to them pursuant to
sub-paragraph b. above, the holders of Preferred shares C', CC'
and CC1' shall have no claim against the Bank, the interested
parties, the Officers or the employees of the Bank, in relation
to the non- distribution of a dividend for the period from July1,
2002 until the date of payment. To avoid any doubt, nothing in
the above-stated shall derogate from the rights of the said
shareholders to accumulate preferred dividend in respect of their
shares according to the Articles of the Bank including in
relation to the said period.
3. The arrangement shall determine that in any event, whether the sale to
the purchaser has been finalized in accordance with the proposed Sale
Blueprint, attached as annex "A" to the Letter of Principles, until
December 31, 2009 and whether for whatever reason the sale pursuant to
the Sale Blueprint has not been finalized until December 31, 2009 or a
liquidation order shall be granted against the Bank or the general
meeting decided on a voluntary liquidation of the Bank prior to this
date, the hereinafter stated shall apply:
a. The parties shall not object to the return to the Bank on July
31,.2008 or on the date of approval of the arrangement to be
submitted by the Bank to the court, whichever is the later of
them, of the perpetual deposit deposited with the Ministry of
Finance. The return of the said perpetual deposit shall serve the
Bank, first and foremost, for purposes of the full payment of the
special line of credit made available to the Bank by the Bank of
Israel.
b. Subject to the payment of all the amounts due to them in
accordance with the Letter of Principles and this Letter of
Consents, as the case may be, the holders of Preferred shares
C',CC' and CC1' shall waive their demands and contentions against
the State in relation to the payment of dividend for any period
whatever, in the past and in the future, or in connection with
the perpetual deposit or its return to the Bank.
c. Subject to the approval of the arrangement and its execution, the
Bank shall waive its demand and claims against the State in
connection with the payment of interest on the perpetual deposit
to the holders of the Preferred shares C',CC' and CC1' or the
return of the perpetual deposit pursuant to this agreement.
d. The aforesaid consents shall be included in the motion for
approval of the arrangement plan , pursuant to Section 350 of the
Companies Law 1999, which shall be submitted by the Bank for
approval by the court, and which shall become effective upon
receipt of the approval by the court of the arrangement plan.
e. If for whatever reason the approval of the court for the
arrangement plan is not obtained, then all the rights which the
parties had ,as the case may be, on July 8, 2007 shall be
reserved for them.
f. Should the court approve this arrangement, Originating Motion
1294/04 shall be struck out and likewise Civil Appeal 174/08
without an order for costs. It is agreed upon that the judgment,
the subject matter of the said Civil Appeal, binds the Bank and
the State only as far as their relationship regarding the various
C' shares' portion of the perpetual deposit.
--------------- --------------------------------------------
State of Israel Office of Advocate Efrati Galili in the name
of the holders of C' and CC' shares of the Bank
detailed in Annex "C" attached to the
Letter of Principles