Paz Oil Company Ltd. (TASE:PZOL) yesterday filed a motion with the Tel Aviv District Court to appoint a receiver for fast food chain Burger Ranch, which it controlled until its sale to the Hoshinsky family. The company took the action fearing the chain could become insolvent, imperiling repayment of the loan Paz granted the Hoshinsky family as part of the transfer of ownership. Paz could either retake control of the chain and attempt to turn it around, or sell it on to a third party.
In January 2006, Paz sold all its holdings in Burger Ranch to Yosef Hoshinsky, to whom it also provided a NIS 20 million loan to repay part of the owners loan that Paz gave the chain in the past. Under the agreement, the outstanding balance of the loan - NIS 24 million (which was secured by a number of liens), was to have been repaid out of Burger Ranch's profit, subject to it meeting the minimum profit targets the two sides agreed on.
In January 2008, Hoshinsky died suddenly, and his brother, Rami Elad, who is also CEO of the chain, took over the reigns. Elad undertook to meet the chain's liabilities under the sale and loan agreements. At the end of April, Burger Ranch's debt to Paz stood at NIS 16 million.
On Tuesday, it was reported that the Burger Ranch chain had still not paid some of its staff their salaries for July. The chain, which appears to be struggling, confirmed the report, and said it was in the process of transferring its employees' salaries.
Burger Ranch has 70 branches nationwide.
Published by Globes [online], Israel business news - www.globes-online.com - on August 14, 2008
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