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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 11, 1996
AMPAL-AMERICAN ISRAEL CORPORATION
(Exact name of Registrant as specified in its charter)
NEW YORK 0-538 13-0435685
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation
1177 AVENUE OF THE AMERICAS, NEW YORK NEW YORK 10036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (212) 782-2100
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(Former name or former address, if changed since last report.)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
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On December 11, 1996, Bank Hapoalim B.M. ("Hapoalim"), and Registrant
entered into an Exchange Agreement ("Exchange Agreement") pursuant to which
Hapoalim and Registrant exchanged all of the 3,000,000 shares of Registrant's
Common Stock owned by Hapoalim for 3,000,000 shares of Registrant's Class A
Stock. As previously reported, Registrant's Board of Directors formed a "Special
Committee" consisting of five outside directors to consider Hapoalim's request
to (i)equalize the Common Stock with the Class A Stock, and (ii)compensate
Hapoalim for the reduction in its voting rights which would result from such
equalization. The Special Committee was authorized to negotiate, approve or
disapprove any such transaction on Registrant's behalf. The Special Committee
retained independent counsel and an independent investment bank to advise it in
connection with Hapoalim's proposal. The Special Committee unanimously approved
the exchange transaction and recommended that Registrant's Board of Directors
also approve such transaction and take all actions appropriate to effectuate it.
Registrant's Board of Directors approved the exchange transaction and the
Exchange Agreement by the unanimous vote of all directors then present and
voting at a meeting held on December 11, 1996.
In addition, on December 11, 1996, pursuant to the Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated May 12, 1996, which Hapoalim
and one of its wholly-owned subsidiaries, Atad Hevra Lehashkaot Limited ("Atad")
(collectively, the "Bank") entered into with Rebar Financial Corp. ("Rebar") and
Daniel Steinmetz, Benjamin Steinmetz and Raz Steinmetz, Atad delivered to Rebar
1,500,001 shares of Registrant's Class A Stock in consideration for $11,798,583,
previously deposited by Rebar and held in escrow by Hapoalim(plus interest).
As previously reported, on June 6, 1996, pursuant to the Stock
Purchase Agreement, Atad delivered to Rebar 5,742,351 shares of Registrant's
Class A Stock in consideration of $45,167,583.
Between May 24th and 28, 1996, Rebar purchased an additional 120,000
shares of Registrant's Class A Stock in open market transactions.
Prior to the consummation of the transactions described above, the
Bank had beneficially owned 3,000,000 shares of Registrant's Common Stock
(representing 100% of the outstanding Common Stock) and 10,500,991 shares
(assuming conversion of shares of Registrant's Preferred Stock owned by the
Bank) of Registrant's Class A Stock (representing 50.2% of the outstanding Class
A Stock). As the holder of all the outstanding Common
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Stock, as to matters submitted to the vote of the shareholders of Registrant
(including the election of directors other than the Class A directors),the Bank
was entitled to cast a number of votes equal to the total number of votes cast
by the holders of Class A Stock, but, in no event, more than ten votes per share
of Common Stock. Thus, before the exchange of the Bank's Common Stock for Class
A Stock, as described above, the Bank had the power to elect at least
approximately 75% of Registrant's directors.
Following the consummation of the transactions described above, there
were no shares of Registrant's Common Stock outstanding, Rebar beneficially
owned 7,362,352 shares of Registrant's Class A Stock (representing 31.1% of the
outstanding Class A Stock), making it the single largest shareholder of
Registrant, and the Bank beneficially owned 6,258,639 shares (assuming
conversion of shares of Registrant's Preferred Stock owned by the Bank) of
Registrant's Class A Stock (representing 26% of the outstanding Class A Stock).
These transactions were executed by the Bank in order to comply with
the requirements of the Israeli banking laws requiring the Bank to decrease to
25% or less its holdings in and means of control over Registrant by December 31,
1996. Following the consummation of the transactions described above, the Bank
owned 5,874,281 shares of Registrant's Class A Stock, representing 24.9% of the
outstanding Class A Stock (without assuming conversion of shares of Registrant's
Preferred Stock owned by the Bank).
On June 19, 1996, Registrant's Board of Directors was increased from
11 members to 14 members by the addition of Hillel Peled, Michael W. Sonnenfeldt
and Raz Steinmetz to Registrant's Board of Directors at the recommendation of
Rebar.
In connection with the initial closing under the Stock Purchase
Agreement, Rebar obtained a bridge loan from The First International Bank of
Israel Ltd. (the "Lender"), in Israel, in the amount of $45,580,000,
representing approximately 80% of the funds paid at the initial closing. The
balance of the funds were contributed to Rebar by Benjamin Steinmetz, Daniel
Steinmetz, and Raz Steinmetz, its Directors, executive officers and controlling
persons. The loan from the Lender bears interest at a floating rate equal to
.75% above LIBOR and was due by its terms six months from the date of funding
and continues to remain outstanding. The bridge loan can be prepaid in whole or
in part at any time on an interest payment date. Upon repayment of the bridge
loan, the Lender has indicated that it is prepared to provide a replacement loan
for a period of up to 9-1/2 years, with the interest rate and payment schedule
to be determined at that time. Rebar has granted to the Lender a first priority
lien and security interest on the Class A Stock acquired pursuant to
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the Stock Purchase Agreement. If at the end of any quarter the value of the
pledged shares is less than the amount of the debt to the Lender, then Rebar is
obligated, on demand from the Lender, to either repay the excess portion of the
loan or provide additional collateral. If the excess portion of the loan is not
repaid, or additional collateral is not provided, the Lender has the right to
call the loan and require it to be paid in full. The loan is guaranteed by
Benjamin Steinmetz and Raz Steinmetz to the extent, in the aggregate, of 25% of
the amount of the loan.
The Stock Purchase Agreement is written in Hebrew. A copy of an
English translation was filed as an exhibit to Amendment No. 32 to Hapoalim's
Schedule 13D filed on May 29, 1996. A summary of certain terms of the Stock
Purchase Agreement was previously reported by Registrant in its Form 8-K filed
on May 28, 1996. Such summary was based on the English translation of the Stock
Purchase Agreement provided by the Bank as well as the summaries set forth in
amendments to Schedule 13D filed by the Bank and Rebar.
As previously reported, the Stock Purchase Agreement contains various
agreements between the Bank and Rebar including, among other things, agreements
as to the composition of the Board of Directors of Registrant and certain other
matters affecting the governance of Registrant. As reported by the Bank and
Rebar in recent amendments to their respective Schedules 13D, the Bank and Rebar
have an understanding that the special shareholders meeting to elect a new Board
of Directors of Registrant, which the Stock Purchase Agreement required to take
place no later than March 31, 1997 (the "Election Shareholder Meeting"), will
instead take place in May 1997 as part of Registrant's next annual meeting of
shareholders.
ITEM 5. OTHER EVENTS.
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On December 11, 1996, Shlomo Recht, the Chairman of Registrant's Board
of Directors and an employee of Hapoalim, announced that, effective December 31,
1996, he would resign, as required by the Banking (Licensing) Law in effect in
Israel, which prohibits an employee of Hapoalim, such as Mr. Recht, from serving
as Chairman of a non-banking company, such as Registrant. Pending election of a
new Chairman, Lawrence Lefkowitz, President and Chief Executive Officer, will be
assuming the duties of the Chairman. Raz Steinmetz has been elected as Chairman
of the Executive Committee of Registrant's Board of Directors.
Pursuant to the Exchange Agreement, Registrant agreed to recommend to
its shareholders that at the next meeting of Registrant's shareholders they vote
in favor of an amendment to Registrant's Restated Certificate of Incorporation,
as amended ("Registrant's Certificate"), that shall provide for (i) the removal
and elimination of the Common Stock from Registrant's
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authorized shares, and (ii) the cancellation of any reference to the Common
Stock in Registrant's Certificate.
In accordance with the Exchange Agreement, Registrant agreed that
until such time as Registrant's Certificate is amended as described above, (i)
Registrant shall not reissue, resell, transfer, distribute or take any other
action with respect to any or all of the Common Stock and (ii) Registrant shall
not issue any class of equity security that has voting rights that are
preferential to the voting rights of the Class A Stock, other than preferred
stock that has customary preferential voting rights with respect to the election
of members of Registrant's board of directors only in the event of the
nonpayment of preferential dividends. In addition, Registrant further agreed
that until such time when Hapoalim's interest in Registrant, whether directly or
through subsidiaries of Hapoalim, is less than 10% of the outstanding shares of
the Class A Stock, Registrant shall not issue any class of equity security that
has voting rights that are preferential to the voting rights of the Class A
Stock, other than preferred stock that has customary preferential voting rights
with respect to the election of members of Registrant's board of directors only
in the event of the nonpayment of preferential dividends.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Exhibit 99 -- Exchange Agreement, dated as of December 11, 1996, between
Ampal-American Israel Corporation and Bank Hapoalim B.M.
(Incorporated by reference to Exhibit 2 to Amendment No. 34 of
Schedule 13D filed by Bank Hapoalim B.M. on December 20, 1996.)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registration has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
AMPAL-AMERICAN ISRAEL CORPORATION
Date: December 24, 1996 By:/s/Lawrence Lefkowitz
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Lawrence Lefkowitz, President
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