Trust Crisis Between Katzman and Abu, Dahari, and Adiv Threatens G-City Deal
The deal for the sale of control in G-City is at risk of collapse due to a severe crisis of trust between seller Chaim Katzman and buyers Tzahi Abu, Kidan Dahari, and Yaron Adiv.
Although the parties to the deal for the sale of control in G-City are expected to submit the deal documents to the Competition Authority today for approval, the entire move is in danger of collapsing. As revealed by Calcalist, a severe crisis of trust has emerged between Chaim Katzman, who is selling control of G-City through his company Norstar, and the buyers — Tzahi Abu (through Ari Nadlan), Kidan Dahari, and Yaron Adiv (through Ishpro-Tnuport).
The buyers deposited 20 million shekels, an amount that will be forfeited if they withdraw. According to the agreement, in the first stage, Ari Nadlan is to purchase 26% of G-City shares for 661 million shekels, and in the second stage, an additional 7% for 200 million shekels. At the heart of the dispute is Katzman's demand for the agreement signed between Abu and Ishpro-Tnuport. Abu refuses to transfer it, claiming his commitment to the deal terms is sufficient.
Simultaneously, Abu demanded the G-City board's decisions regarding recent debt raising and the approval of a "golden parachute" for CEO Keren Khalifa. At their last meeting, Katzman updated Abu on his intent to raise about 260 million shekels in bonds, which Abu opposed, arguing the company does not need funds given the expected billion-shekel capital injection.
"The chances are 50:50 for completing the deal. The question is who will climb down from the tree first," said a source familiar with the details. It appears both sides are reluctant to proceed but are hesitant to admit it. Katzman proposed a one-stage deal structure, but Abu demanded a 10% discount, which Katzman rejected.
Katzman's circle claims Abu and Dahari acted unethically by calling for executive salary cuts and hinting that Katzman had no future role. Dahari's comment about specializing in "distressed" deals particularly infuriated Katzman, who subsequently began scrutinizing Ishpro-Tnuport's financial stability. Conversely, Abu was furious over the bond raising and the golden parachute for Khalifa, feeling Katzman was "poking him in the eye."
Sources suggest Katzman hoped to remain a significant partner, a plan that is no longer viable. If the deal is canceled, G-City and Norstar shares are expected to fall sharply. Meanwhile, Katzman's associates believe Abu is the one seeking an exit after the capital market's lukewarm reception of the deal.
