FIMI acquires TAT Technologies for $6 million

ישי דווידי 2

 Ishai Davidi

/By Ilan Shavit /

First Israel Mezzanine Investors Fund (FIMI), leads by Ishai Davidi, has acquired the 43.71% controlling interest in TAT Technologies Ltd. (Nasdaq:TATT; TASE:TATTF) from TAT Industries Ltd. (TASE:TAT5) for $ 6 million. TAT Technologies develops and manufactures components for military and civilian aircraft. It has a market cap of $53 million. The sale was handled by the Tel Aviv District Court-appointed receivers of Kaman Holdings Ltd.

The closing of these agreements is subject to the approval of TAT’s shareholders ת in a meeting which will be held shortly after the signing of the agreement.
According to the press release, the main elements of the agreement are as follows:

– FIMI will purchase 857, 143 ordinary shares at a price of $7 per share for a total investment of $6, 000, 001.

– In addition, the company will issue to FIMI, without any further consideration, a non-negotiable warrant for the purchase of up
to 500, 000 shares of the Company at a price of $8.50 per share.

– The Company shall pay to FIMI, annual management fees in an amount equivalent to 3% of the operating profit of the Company
exceeding $500, 000. The total management fees shall not exceed $250, 000 per annum.

– FIMI shall make a credit line in the amount of $2, 000, 000 available to the Company during a period of 54 months after closing.
The corresponding loans shall bear an annual interest of 5%.

– FIMI and TAT Industries Ltd., the Parent Company of TAT Technologies Ltd., shall enter into a 7 year agreement, which set voting arrangements
between the parties and will impose restrictions on each parties ability to sell their respective holdings of the Company’s shares.

– Subject to applicable law, during the term of the shareholders agreement, the shareholders agreed to direct the directors
of the Company to distribute annual dividends in an aggregate amount of at least 40% of the Company’s profit. (For 2004 the intention is to
distribute more than 40%). This shall not be deemed to constitute a dividend policy of the Company.

TAT, together with its subsidiaries, is principally engaged in the manufacture, repair and overhaul of heat transfer equipment, such as heat
exchangers, precoolers and oil/fuel hydraulic coolers used in aircraft, defense systems, electronic equipment and other applications. In addition the
company manufactures and overhauls aircraft accessories and systems such as pumps, valves, Power Systems, Turbines, etc.

FIMI Opportunity Fund is the first investment fund in Israel to offer “one-stop-shop”, for buy-outs and mezzanine financing.
The Fund has a diversified portfolio, whereas the investments are in matured companies, with proven track record of revenues, positive cash flow,
significant profitability and strong management.

The sale was handled by Tel Aviv District Court-appointed receivers of Kaman Holdings Ltd. (TASE:KMNH) to sell its holdings in subsidiaries on which Bank Hapoalim (TASE: POLI) and Israel Discount Bank (TASE: DSCT) have liens. Kaman subsidiary Isal Amlat Investment Ltd. (TASE:ISAL) controls TAT Technologies.

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