The deadline for Jared Kushner to make an exclusive bid for the Delek’s financial assets, the Phoenix Group, runs out on September 30th. While the deal may well go through, complications multiply.
Delek is focusing on streamlining its assets and focusing on its oil and natural gas assets, particularly in the Leviathan and Tamar fields, but selling off its insurance and financial segment, Phoenix. Jared Kushner, son in law of real estate tycoon Donald Trump, has expressed interest in making a $1.7 billion shekel or $480 million bid for a 47% controlling stake in the company.
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Kushner’s main hurdle is obtaining an insurance licence from the director of the Finance Ministry’s Capital Market, Insurance and Savings Department, Dorit Salinger. This may be complicated if there are other firms that want to buy a stake in Phoenix, which means that they will have to get insurance clearance too, and the process might be slowed down. To obtain an insurance license, Kushner needs to prove that he has sufficient cash and clear assets.
Another issue is that Delek has offered Kushner a seller’s loan to help cover it, and this would be paid off in four to five years at an interest rate of 4.75%. The relatively low rate of interest is a negative for Delek, and the fact that Delek will effectively still have authority over the stake is a negative for Kushner. In addition, the company has increased in value 160 million shekel since the deal was initially discussed.
Added to that, Kushner’s father, Charles Kushner was sentenced to two years in prison for tax evasion, witness tampering and illegal campaign contributions, and the treasury is looking into the family’s checkered past.
However, with Delek eager to sell Phoenix, it is still likely that Kushner, despite the headwinds, might be able to obtain Phoenix at a lower price.