In an interview with "Globes", Milomor chairman and CEO Freddi Robinson said that there was no comparison between the company and bankrupt Heftsiba. "There are no similarities between what's happened to us and what happened to them. First, we don’t have such apartments, and second, the debts to the banks and unsecured creditors are for two clear projects that cannot push the company into collapse and they won't harm the tenants."
Robinson owns 53.1% of financially troubled Miloumor Ltd. (TASE: MILO), which, earlier this month, asked the Tel Aviv District Court for a stay in proceedings because of its NIS 890 million debt. The request also applies to Robinson's private company, Freddi Robinson Properties Ltd. and him personally. Milomor claims that it is not insolvent because it has NIS 1.23 billion in assets.
Milomor's biggest debts are NIS 400 million to Bank Hapoalim (TASE: POLI; LSE:80OA) for a project in Ashdod and NIS 57 million to First International Bank of Israel (TASE: FTIN1;FTIN5). The company owes NIS 500 million to secured creditors, NIS 325 million to unsecured creditors, and NIS 60 million to parties at interest. The Tel Aviv Stock Exchange (TASE) has suspended trading in the company's shares.
Robinson refuses to accept responsibility and blames the banks for Milomor's circumstances. "Our real estate projects in Israel haven't failed. They've been completed and the tenants are happy and have no complaints. It's true that they've caused us accounting losses because of heavy financing expenses and the time that they took to build. If you own land with no building permits, the longer a project takes, the financing expenses kill it.
"Globes": Did you fail as manager and should you resign?
Robinson: "No. I think I still have something to contribute. I'll do everything I can to rescue the company from this crisis."
Why did the negotiations with the banks fail?
"They didn’t fail. The negotiations with Bank Hapoalim succeeded, but the other banks didn’t want to give us credit for current operations, and Bank Hapoalim refused to increase its credit to us."
He noted, "The banks are nervous now and are pressing you. If you lack the necessary cash flow from one day to the next, they pull the trigger and shoot you."
Robinson has personally injected NIS 60 million into Milomor and signed hundreds of millions of shekels guarantees to creditors. The company's share has fallen 90% in the past year and its market cap has plummeted to just NIS 24 million
Considering what has happened to Heftsiba and Milomor, is there a real estate bubble in Israel?
"No. Israel had a real estate shortage, not a bubble. "
Should you have focused solely on the Romanian market?
"You know, in Israel it took me 13 years to get a building plan approved. Do you know what I accomplished in 13 years abroad? I built casinos, sold them, and built more. The process in Israel is exhausting. Time works against you. In retrospect, maybe I shouldn’t have invested in Israel, but that's now an academic matter. I always thought it was the right thing to do."
Published by Globes [online], Israel business news - www.globes-online.com - on October 5, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008