The stock exchange opposes the outline of the split in Sumoto – the capital market

The management of the stock exchange determines that the proposed outline of the split in

Sumoto
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Does not meet the conditions set forth in the TASE’s Regulations for Split Matters. Somoto reports today to investors. The rationale behind the split process is to allow a company operating in a number of areas of activity, which are not necessarily synergistic, to split the activities between two companies in order to flood value.

A split procedure, according to the stock exchange’s regulations, must be completed in the two new companies, but with the same ownership as the ownership in the splitting company. To the stock exchange view the outline of the split proposed by Smoto does not meet this condition.

The company states that the stock exchange letter was received after correspondence and conversations took place between the stock exchange and the company. In these conversations, Sumoto received the impression that the outline of the split presented to the stock exchange complies with the provisions of the law. The company also notes the consent of the Securities Authority and the splitting court. The authority further clarified that it is currently examining Somotula’s desire to reduce capital.

Recall that the company has reached agreements on a merger with the energy storage company Nostromo. According to Sumoto this agreement is not in jeopardy because the split is not a condition for the fulfillment of the agreement. Last August, Sumoto decided to enter the hot field of storing and managing energy demand in exchange for an allotment of shares and warrants, which after the allotment will constitute about 73.5% of Sumoto’s shares. Nostromo’s shareholders include the Ben – Nun family, a transport group, Yehudit and Kobi Richter, Rami Unger and Menora Mivtachim Energy.

In exchange for the merger, the company will invest about $ 10 million, and will allocate shares and warrants, which after the allotment will constitute about 73% of Sumoto’s shares. Upon completion of the move, Sumoto will continue to operate in order to become two public companies: Nostromo Company and a company that will concentrate existing operations and assets.

The company is examining the implications of the stock exchange’s refusal, and is considering its steps in this regard, including with the stock exchange, with the intention of finding a solution that will adorn its plans in connection with the existing activity.

Sumoto shares are trading down 3%. This is a relatively minor decline in light of the significant increase in the value of the company in light of the merger announcement. So the market expects that although it is a stick in the wheels for Sumoto’s wishes, it will only be temporary.

Sumoto stated: “The split process is not a condition for a merger with Nostromo. Sumoto will act to flood the value of the existing activity for its shareholders by continuing to split the activity or in any other way