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Idan Ofer profits on Morgan Stanley Israel Corp. share buyback

The Israel Corp’s share price has fallen 61% since Idan Ofer loaned shares to Morgan Stanley three years ago.

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Idan Ofer / Getty

Idan Ofer / Getty

/ By Efrat Peretz /
Idan Ofer has bought back Israel Corporation (TASE: ILCO) shares loaned almost three years ago to Morgan Stanley (NYSE: MS) as part of a financing deal with the investment bank. Ofer bought back 107, 700 Israel Corp. shares, 1.4% of the company. The stake is currently worth NIS 17.2 million ($62 million).

Ofer lent the shares to Morgan Stanley as part of a $100 million financing deal. The shares were worth NIS 44.2 million at the time. In the interim, Israel Corp.’s share price has fallen 61%, which means that Ofer is buying back the shares at a fraction of the price at which he lent them, giving him a capital gain on the deal.
The financing deal with Morgan Stanley in December 2010 was for the purpose of new investments by Ofer and raising credit. He apparently used the credit for private deals, including in Pacific Drilling SA (NYSE: PACD; NOTC: PDSA), XT Shipping Ltd. (formerly Ofer Shipping Group Ltd.), and the failed electric car venture Better Place Inc.
The lending period was set to expire at the end of 2011, but Ofer exercised his option to extend it. At the end of the extension period, he had the choice of again extending the lending period or buying back the shares from Morgan Stanley. He decided on the latter.
In late July, Ofer announced his resignation as a director at Israel Corp. and that he would not hold any other position at the company. The resignation was part of his move from Israel to London.
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