Blue Square - Israel Announces Board Approval to the Reorganization of its Real Estate...

Blue Square - Israel Announces Board Approval to the Reorganization of its
Real Estate Activities, to be Centralized in its Subsidiary (80%), Blue Square
Real Estate Ltd

ROSH HA'AYIN, Israel, January 12 /PRNewswire-FirstCall/ -- Further to its
announcement dated December 30, 2008, regarding the reorganization of its
retail activities under its wholly owned subsidiary, Blue Square Chain
Investments and Properties Ltd. ("BSIP"), and regarding the suggested
reorganization of its real estate activities, Blue Square - Israel Ltd.
(NYSE:BSI) (the "Company") announced today that further to the transfer of
the Company's real estate assets to its subsidiary, Blue Square Real Estate
Ltd. ("BSRE") and the IPO of BSRE completed in 2006, the company's Board of
Directors and BSRE Audit Committee and Board of Directors have approved a
reorganization of all of the Company's real estate properties, to be
transferred to BSRE (held 80% by the company). Following the completion of
the transaction, all real property will be held by BSRE, and all the food
retail activities will be centralized in BSIP.
Within the approved transaction, all real estate property (and related
leases) held by BSIP and BSIP's subsidiaries would be transferred to BSRE.
Most of such real estate property will be leased back by BSRE to BSIP for its
retail activities under terms similar to the existing lease agreements
between BSRE and BSIP, and the Company, regarding other real estate assets.
The periods of these existing lease agreements would be extended to match the
period of the new lease agreement - 10 years from the transfer of the BSIP
real estate assets to BSRE, with an additional option period of five years
exercisable by BSIP.
The sale of BSIP's real estate property (and related leases) to BSRE
would be for an aggregate consideration of approx. NIS 464 million, based on
an appraisal by an independent appraiser. BSRE plans to finance 50% of the
consideration from its existing sources and 50% by a financial institute. In
the event BSRE does not obtain the required financing prior to closing of the
transaction, BSRE will be entitled to postpone payment of up to NIS 200
million of the consideration until April 1st, 2010, during which time this
amount will bear interest at 7% per annum and be linked to the Israeli
consumer price index The transaction is subject to various taxes and levies
according to Israeli law which are under examination by the company and its
advisors .
The lease agreement between BSRE and BSIP would contain terms similar to
the existing lease agreements, which provide for annual rent for property
used for supermarkets to be the higher of 2% of the annual turnover of that
store or 9% of the amount paid by BSRE to purchase the underlying real estate
of that store (excluding consideration paid for certain unused building
rights), plus amounts invested by BSRE in the asset, reduced by certain costs
and payments and increased according to Israel's CPI. The annual rent for
property not used for stores would be equal to 9% of the amount paid by BSRE,
linked to increases in Israel's CPI.
The transfer of real estate properties, the lease agreement and closing
of the transactions are subject to approval by BSRE shareholders. According
to the Israeli Companies Law, such approval is valid only if either (1) the
majority of shares voted at the meeting in favor of the transaction includes
at least one third (1/3) of the shares of shareholders who do not have any
personal interest in the transaction who are participating in the voting at
the meeting, in person or by proxy, without taking into account abstentions,
(2) if the total number of shares voted against the transaction by
shareholders who do not have any personal interest in the transaction does
not exceed one percent (1%) of the aggregate voting rights in the company.
Blue Square-Israel Ltd. is a leading retailer in Israel. A pioneer of
modern food retailing, in the region. Blue Square currently operates 194
supermarkets under different formats, each offering varying levels of
services and prices. For more information, please refer to the Blue
Square-Israel Ltd. website at http://www.bsi.co.il.
Forward Looking Statements
The statements contained in this release, except for historical facts,
which are forward-looking with respect to plans, projections, or future
performance of the Company, involve certain risks and uncertainties.
Potential risks and uncertainties include, but are not limited to, risk of
market acceptance, the effect of economic conditions, the impact of
competitive pricing, supply constrains, the effect of the Company's
accounting policies, as well as certain other risks and uncertainties which
are detailed in the Company's filings with the Securities and Exchange
Commission, particularly the Annual Report on Form 20-F for the year ended
December 31, 2007.
Contact:
Blue Square-Israel Ltd.
Elli Levinson-Sela
General Counsel & Corporate Secretary
Telephone: +972-3-9282670
Fax: +972-3-9282498
Email: ellils@bsi.co.il

SOURCE Blue Square Israel Ltd

Contact: Blue Square-Israel Ltd., Elli Levinson-Sela, General Counsel &
Corporate Secretary, Telephone: +972-3-9282670, Fax: +972-3-9282498, Email:
ellils@bsi.co.il