Tomer Mazon, listed on the Tel Aviv Stock Exchange, recently reported receiving a letter of warning before legal proceedings, accompanied by a request to certify a class action. Concurrently, the company was informed of a derivative lawsuit filed in the Tel Aviv District Court. Both proceedings involve complex claims regarding the merger transaction used by the company to enter the stock exchange via the shell company Seapia Vision. The central claim in the filings is that the financial reports serving as the basis for the valuation did not accurately reflect the company's actual operational results.
According to the plaintiffs, this led to a bias in the share allocation ratio, benefiting controlling shareholder Doron Kimelov while diluting the holdings of Seapia Vision's long-term shareholders. The alleged damages in each of these proceedings exceed 2. 5 million NIS. The derivative suit, filed on behalf of the company itself, alleges a breach of fiduciary duties and duty of care by past and current officers, as well as by the controlling shareholder. According to the report, the merger valued Tomer at approximately 82 million NIS, with the share allocated to Kimelov standing at about 71% of the merged company, compared to about 28% left for existing shareholders.
The focus of the legal challenges is the valuation, particularly the inventory assessment, which may have led to an inflation of the company's total value. These proceedings follow an unusual event at the company, where the designated CFO, Avital Pearlstein-Cherny, chose not to assume her position due to reservations regarding the accounting treatment of inventory. Consequently, the board of directors ordered an immediate review of the financial reports published at the end of last April.
It is important to note that a class action is subject to prior court approval, and there is no certainty it will be approved or upheld in the future. As of the reporting date, the company stated it is reviewing the legal filings and their implications. The company's internal accounting review has not yet concluded, and no update regarding a restatement of financial reports has been published. For investors, these events add a layer of legal and accounting uncertainty hanging over the company and its controlling shareholder.