Friday May 24, 7:00 am Eastern Time

Formula Systems Announces Debenture Offering

HERZLIA, Israel, May 24 /PRNewswire-FirstCall/ -- Formula Systems (1985) Ltd (Nasdaq: FORTY - news), today announced that it has commenced a public offering of up to NIS 70 million (approximately $14 million) of debentures. Options to purchase an aggregate of up to 2 million of Formula's ordinary shares will be attached to the debentures. The offering is being made pursuant to a prospectus in Israel. The offering is expected to close within the next 10 days.

The debentures are payable in a lump sum in three years, but can be redeemed earlier by the holders at a predetermined redemption price. The nominal interest rate for the entire three year term is approximately 17%. Principal and interest on the debentures are linked to the Israeli consumer price index.

The associated options have a term of one year and are exercisable at a price of NIS 75 (approximately $15.3) per ordinary share. The exercise price of the options is also linked to the Israeli consumer price index.

Formula Systems (1985) Ltd. (Nasdaq: FORTY - news):
Formula Systems Ltd., is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and providing computer-based business solutions.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Statements made in this press release that are not historical facts are forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to: market demand for the company's products, dependence on strategic partners, integration of new business, successful implementation of Formula's products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's Securities and Exchange Commission filings, including its most recent report on Form 20-F. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.