Hapoalim International NV Private Offering of Securities (9616A)

TIDM51IR

RNS Number : 9616A

Hapoalim International NV

03 June 2019

RNS Notification

03 June 2019

Offering Circular dated 30 July 2015 in respect of the USD 2,500,000,000 Global Medium Term Programme (the "Programme") of Hapoalim International N.V. (the "Issuer"), as amended, restated or supplemented from time to time (the "Offering Circular")

RE: Notification in respect of certain events affecting Bank Hapoalim B.M., the guarantor of the Issuer's obligations under the Programme

Terms used but not otherwise defined herein shall have the meanings ascribed to them in the Offering Circular.

The Issuer makes the following announcement in respect of Bank Hapoalim B.M., the guarantor of the Issuer's obligations under the Programme (the "Guarantor"):

The Guarantor has published the attached immediate report on a private offering of securities:

LEI of the Guarantor: B6ARUI4946ST4S7WOU88

Class and sub-class of regulated information: Ongoing regulated information - Inside information

For further information please contact:

Gilad Bloch

Secretary of the Bank

Bank Hapoalim B.M.

   Direct Dial:            [phone] 
   Email:                   [e-mail] 

The following is an unofficial translation of the Hebrew report and has been prepared for convenience only. In case of any discrepancy, the Hebrew version prevails.

Head Office

63 Yehuda Halevy St., Bank Hapoalim Building, Tel Aviv 65781

Telephone: [phone]; Fax: [phone]

Date: May 29, 2019

   To:                                                       To: 
   The Securities Authority                     The Tel Aviv Stock Exchange Ltd. 
   22 Kanfei Nesharim Street                 2 Ahuzat Bait St 
   Jerusalem                                             Tel Aviv 

Ladies and Gentlemen,

Re: Immediate Report Pursuant to the Securities Regulations (Private Offering of Securities in a Listed Company), 2000

Further to the outline published by Bank Hapoalim Ltd. (the "Bank") on May 1, 2018 (Reference Number 2018-01-034557; (the "Outline")) pursuant to the Securities Regulations (Details of Outlines for Offering Securities to Employees), 2000, and the Securities Regulations (Private Offering of Securities in a Listed Company), 2000 (the "Private Offering Regulations"), in which the Bank reported, inter alia, on future grants based on the Outline of up to 2,000,000 restricted shares that may be granted during the Outline period to future offerees, namely the chair of the Board of Directors, the CEO, members of management, and senior executives in the Bank and the Bank's subsidiaries (or managers who have retired) and up to 2,000,000 restricted share units (RSU) to the Bank's managers and employees (jointly, the "Future Grants"), the Bank hereby respectfully reports the actual grants that were approved by the Bank's Board of Directors in the framework of the Future Grants,([1]) as follows:

1. Quantity offer and types of offered securities - On May 28, 2019, the Bank's Board of Directors (the "Board of Directors" or the "Bank's Board of Directors") approved an issuance of up to 572,478 restricted shares for three years and 26,106 restricted share units that, upon certain conditions being fulfilled, shall self-execute automatically for up to 26,106 ordinary shares in the Bank with a par value of NIS 1.00 each (the "Exercise Shares"), subject to adjustments, out of shares held by the Bank as dormant shares, without payment of any cash exercise price. Said grants constitute implementation of the Bank's existing compensation plans.

2. The Offerees - As noted above, the issuance described in Section 1 of this report is from the quantity denominated in the Outline that was intended for Future Grants to future offerees, as these terms are defined in the Outline. The issuance will be to the offerees (the "Offerees") as follows:

2.1 20,552 shares that are restricted from sale or transfer for the duration of 36 months as of the end of 2018 (the year for which they were granted) ("Restricted Shares") that will be allocated to the chair of the Bank's Board of Directors;

   2.2       7,457([2])  Restricted Shares that will be allocated to the Bank's CEO; 

2.3 489,202 Restricted Shares that will be issued to 12 members of management and to 98 senior executives (including 4 officers) - all employees of the Bank or subsidiaries of the Bank;

2.4 55,267 Restricted Shares that will be issued to managers who retired from the Bank([3]) (and who were employees of the Bank who served as officers and managers of the Bank in 2018, the year in which the entitlement to the Restricted Shares came into being, the "Retired Managers"); and

2.5 26,106 restricted share units ("RSU") that will be issued to 4 additional central employees([4]) of the Bank.

3. The Offerees are not an "interested party;" offer type - The Offerees are not an "interested party" as this term is defined in the Private Offering Regulations. The chairperson of the Bank and the CEO are "stakeholders" in the Bank based on their positions. The offer to the CEO and to the chairperson constitute a material private offering, while the offer to the other Offerees constitutes a private offering that is not material.

4. The grant as implementation of employment agreements - The Restricted Shares and the RSU are offered to the Offerees for no cash consideration with respect to the employment of the Offerees at the Bank (or the Bank's subsidiaries) in 2018 and constitutes the implementation of employment agreements that were duly executed and approved and pursuant to the Bank's compensation plans that applied on the date of approval of these grants, as well as the Bank's policy regarding the compensation of its officers, senior executives, central employees, and non-central employees, as well as regarding the remaining employees in the group.

5. Percentage of the Bank's share capital([5]) - The Restricted Shares and the shares that will arise from the exercising of the offered RSU (assuming all RSU offered under this immediate report are exercised for exercise shares) shall constitute approximately 0.04% of the Bank's issued and paid up equity and the voting rights therein on the date of the issuance (after the issuance), and approximately 0.04% of the Bank's issued and paid up equity and the voting rights therein on the date of the issuance assuming full dilution (full dilution means, assuming all securities convertible for shares of the Bank are exercised for shares, without taking into account the subordinated notes issued by the Bank and/or the capital notes issued by the Bank).([6])

6. The economic value of the RSU - The theoretical economic value of each RSU according to the Black Scholes model is equal to the closing price of a share in the Bank on the Stock Exchange at the end of the trading day on which the RSU were issued.

   [A]       The calculation was made based on the RSU's terms: 
    -    The exercise price is NIS 0. 

- The RSU include a compensation mechanism for the distribution of a dividend as set forth in Section 2.6.4 of the Outline.

[B] Calculation of the economic value does not take into account the fact that the RSU shall not be listed for trade on the Stock Exchange and does not take into account the RSU's vesting period as set forth in the Outline or the tax that may apply when selling the Exercise Shares.

Accordingly, the theoretical economic value of each individual RSU being offered to the Offerees is NIS 26.92 according to the closing price of the Bank share on the date the Board of Directors approves of the granting of the RSU (May 28, 2019).

7. Details of the securities - The remaining terms of the Restricted Shares and the RSU are set forth in the Outline and are included in this immediate report by way of reference as set forth below: Section 1.1.6 (Price of the Restricted Shares and the RSU), Section 1.1.7 (Restriction Period of the Restricted Shares and Date of Execution of Vesting Conditions of RSU and their Expiry), Chapter 2 (Additional Securities Terms, including Adjustment of Rights and Provisions for Protection of the Offerees, Rules Regarding Severance, Restrictions on Transferability, and Applicable Tax).

8. Absence of agreements. To the best of the Bank's knowledge, the Offerees are not a party to agreements, whether written or oral, with Bank shareholders, or between themselves, or between themselves and others, regarding the purchase or sale of securities in the Bank or regarding the voting rights therein.

9. Restrictions. The securities offered under this report, including the Exercise Shares that shall arise from the RSU, shall be subject to restrictions according to the Outline as well as restrictions as determined by the Board of Directors from time to time, including restrictions intended to prevent a concern of use of insider information.

10. Additional details regarding a material private offering to the chair of the Board of Directors of the Bank and the CEO of the Bank and details according to the Sixth Supplement to the Private Offering Regulations

10.1 The Bank's issued equity, the quantity and percentage of the holdings of the chair of the Board of Directors and the CEO, prior to the issuance and after it, as well as that of other stakeholders of the Bank.

For details about the Bank's issued equity, the quantity and percentage of the holdings of the chair of the Board of Directors and the CEO, prior to the issuance and after it, as well as that of other stakeholders of the Bank, see Section 10.6 below.

   10.2     The consideration and how the consideration was determined 

The Restricted Shares are being offered to the chair of the Board of Directors and to the CEO as part of the terms of their service and employment, for no cash consideration (but in consideration of their service in the Bank), and the offer constitutes implementation of their duly approved employment agreements.

10.3 Material shareholders or officers in the company who have, to the best of the Bank's knowledge, a personal interest in the transaction, and the substance of each of their personal interests

To the best of the Bank's knowledge, neither the Bank's material shareholders nor its officers have a personal interest in the offering of the Restricted Shares to the chair of the Board of Directors and to the CEO of the Bank. The chair of the Board of Directors and the CEO of the Bank have a personal interest in the offering of the Restricted Shares under this report based on their being the Offerees for those same Restricted Shares. To complete the picture, it is noted that additional officers who are not directors are Offerees of the Restricted Shares under the Outline and this report.

10.4 The approvals required or the conditions established for the issuance of the Restricted Shares to the chair of the Board of Directors and to the CEO

10.4.1 Approval of the Bank's Board of Directors for the issuance of the Restricted Shares to the chair of the Board of Directors and to the CEO, as described in this report, was received on May 28, 2019. It is noted that the issuance of the Restricted Shares to the chair of the Board of Directors and to the CEO, as stated in this report, is part of the terms of their service and employment that were approved by the general meeting on April 4, 2017, regarding the chair of the Board of Directors, and on December 19, 2016, regarding the CEO, as set forth in the CEO Compensation Report and the Chair of the Board of Directors Compensation Report (as defined in Section 11 below).

10.4.2 Regarding approval by the Tax Authority, see Section 1.3 of the Outline.

10.5 Date of the issuance of the Restricted Shares to the chair of the Board of Directors and the CEO of the Bank

The Restricted Shares shall be issued immediately after this report. (No additional approvals are required for the issuance.)

10.6 Details about the Bank's issued equity, the quantity and percentage of the holdings of the chair of the Board of Directors and the CEO of the Bank, prior to the issuance and after it, as well as that of the other stakeholders of the Bank

10.6.1 The Bank's issued equity is 1,337,377,111 shares with a par value of NIS 1 per share (This includes the dormant shares held by the Bank).

10.6.2 The closing price per share in the Bank on the Tel Aviv Stock Exchange Ltd. (the "Stock Exchange") on May 28, 2019, the date prior to the publication of this report, was NIS 26.92.

10.6.3 Below are details about the holdings of the chair of the Board of Directors and the CEO of the Bank of shares of the Bank on the date of the report, after the issuance under this report, and fully diluted (The data regarding the equity and voting rights are after neutralizing the dormant shares held by the Bank itself.):

 
                   Quantity   Quantity    Quantity and Percentage of      Quantity and Percentage of      Quantity and Percentage of 
                      of       of RSU    Holding of Equity and Voting    Holding of Equity and Voting    Holding of Equity and Voting 
                  Restricted  Offered    Rights Prior to the Issuance    Rights after the Issuance of      Rights Fully Diluted[8] 
                    Shares     in the               of the                      the Restricted 
                  Offered in  Outline   Restricted Shares and the RSU   Shares and the Vesting of the 
                     the                                                RSU Offered in the Outline[7] 
                   Outline 
                  ----------  --------  ------------------------------  ------------------------------  ------------------------------ 
                                          Number of    % Equity/Voting    Number of    % Equity/Voting    Number of    % Equity/Voting 
                                           Shares          Rights          Shares          Rights          Shares          Rights 
================  ==========  ========  =============  ===============  =============  ===============  =============  =============== 
Chair of the Board 
-------------------------------------------------------------------------------------------------------------------------------------- 
Mr. Oded Eran       20,552      0.00       20,384           0.00           40,936           0.00           40,936           0.00 
----------------  ----------  --------  -------------  ---------------  -------------  ---------------  -------------  --------------- 
CEO 
-------------------------------------------------------------------------------------------------------------------------------------- 
Mr. Ari Pinto       7,457       0.00       133,484          0.01           140,941          0.01           140,941          0.01 
----------------  ----------  --------  -------------  ---------------  -------------  ---------------  -------------  --------------- 
Additional Holders 
-------------------------------------------------------------------------------------------------------------------------------------- 
Arison Holdings 
 (**) (1998) 
 Ltd.                                    210,543,761        15.78        210,543,761        15.78        210,543,761        15.78 
----------------  ----------  --------  -------------  ---------------  -------------  ---------------  -------------  --------------- 
Moshe Koren 
 (member of the 
 Board)                                    13,000           0.00           13,000           0.00           13,000           0.00 
----------------  ----------  --------  -------------  ---------------  -------------  ---------------  -------------  --------------- 
Public (***)                            1,123,910,220       84.21       1,123,882,211       84.21       1,123,882,211       84.21 
----------------  ----------  --------  -------------  ---------------  -------------  ---------------  -------------  --------------- 
Total               28,009      0.00    1,334,620,849       100%        1,334,620,849       100%        1,334,620,849       100% 
================  ==========  ========  =============  ===============  =============  ===============  =============  =============== 
 
    (*) The CEO also holds 4,787 RSU from prior issuances. 
    (**) Arison Holding's percentage of holdings of voting rights was calculated in relation to 
    the total shares held by it and not reduced according to the provision in the holding permit 
    received by Ms. Arison from the Bank of Israel, according to which as of the date the permit 
    takes effect, Arison will not vote utilizing voting rights exceeding 5% of the means of control 
    in the Bank. Accordingly, the voting rights holding percentages of the other holders were 
    also not increased. 
    For details about Arison Holdings (1998) Ltd., see the Bank's immediate report on the status 
    of holdings by stakeholders and senior officers dated April 7, 2019 (Reference Number 2019-01-033580) 
    included in this report by way of reference (the "Holdings Status"). 
    (***) Public, including officers, managers, and Bank employees other than the CEO of the Bank 
    and parties with an interest in the company. 
 
 
 

11. Additional details pursuant to the Sixth Supplement of the Report Regulations

   11.1     Chair of the Board 

11.1.1 Details about the terms of service and employment of the chair of the Board of Directors: For details, see Section 2 of the immediate report regarding the convening of a general meeting to approve the terms of the service and employment of the chair of the Board of Directors, dated February 27, 2017, Reference No. 2017-01-017302 (the "Chair of the Board Compensation Report"), as well as Chapter 6 (Corporate Governance), Subchapter 6.5 (Compensation to Interested Parties and Senior Officers) on page 280 of the Bank's periodic report for 2018.

11.1.2 The Board of Directors' rationale: The Board of Directors indicated, in its rationale for the grant to the chair of the Board of Directors as described in this report, that the granting of the Restricted Shares constitutes implementation of the employment agreements that were duly executed and approved and are according to the Bank's compensation plan and its compensation policy. With regard to this, see the rationale for approval of the equity compensation stipulated for the chair of the Board of Directors that appears in Section 4 of the Chair of the Board Compensation Report.

CEO

11.1.3 Details about the terms of service and employment of the CEO: For details, see Section 3 of the immediate report regarding the convening of a general meeting to approve the terms of the service and employment of the CEO, dated November 8, 2016, Reference No. 2016-01-074259 (the "CEO Compensation Report",) as well as Chapter 6 (Corporate Governance), Subchapter 6.5 (Compensation to Interested Parties and Senior Officers) on page 280 of the Bank's periodic report for 2018.

11.1.4 The Board of Directors' rationale - The Board of Directors indicated, in its rationale for the grant to the CEO as described in this report, that the granting of the Restricted Shares constitutes implementation of the employment agreements that were duly executed and approved and are according to the Bank's compensation plan and its compensation policy. With regard to this, see the rationale for approval of the equity compensation for the CEO that appears in Section 5 of the CEO Compensation Report.

Respectfully,

Bank Hapoalim Ltd.

 
            Ofer Levy                            Erez Yosef 
  Senior Deputy Managing Director      Senior Deputy Managing Director 
         Chief Accountant                Head of Strategy, Resources 
                                            and Operations - COO 
 

[1] It is clarified that the grants described in this report with respect to 2018 and additional grants based on the Outline may be made in the future during the Outline's effective term.

[2] This amount includes 3,384 Restricted Shares granted to the CEO pursuant to his employment agreement, as detailed in Section 3.11 ("CEO's Compensation Update") of the immediate report regarding the convening of a general meeting to approve the terms of the CEO's service and employment, dated November 8, 2016, Reference No. 2016-01-074259. The updating of the CEO's compensation by means of granting him these Restricted Shares constitutes implementation of the CEO's employment agreement and is pursuant to the provisions of Section 2(b) of the Financial Corporation Officers Compensation Law (Special Approval and Non-Deductibility for Tax Purposes Due to Exceptional Compensation), 2016, and based on the Bank's data for 2018.

[3] The allocation to these managers is subject to deduction of tax at source that applies by law to the granting of the Restricted Shares at the time they are granted. The quantity denominated (55,267) is without deduction of tax at source. In practice, a lower quantity will be issued reflecting the net benefit after deduction of tax at source.

[4] A "central employee" in this report - as the term is defined in Directive A301 of the Proper Banking Conduct Directives issued by the Supervisor of Banks.

[5] The data relating to the Bank's issued equity are less dormant shares, as defined in Section 308 of the Companies Law, 1999.

[6] And approximately 0.32% and approximately 0.32% fully diluted, together with the remaining Future Issuances (assuming the entire quantity of Future Grants described in the Outline is issued). The vote holding percentages address all of the Bank's issued equity and were not reduced because of the provision in the holding permit received by Ms. Arison from the Bank of Israel, according to which she will not vote based on voting rights exceeding 5% of the means of control in the Bank (see, the Bank's immediate report dated September 4, 2018 (Reference No. 2018-01-082039)).

   [7]          Assuming the exercise of all RSU granted under this report. 

[8] Assuming all of the securities convertible for shares of the Bank are exercised, including those offered under this Outline, and that there are no more dormant shares (meaning, together with the dormant shares).

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June 03, 2019 07:38 ET (11:38 GMT)