The collapse of the UK real estate market has hit Arazim Investment Ltd. (TASE: AZRM). The company today notified the Tel Aviv Stock Exchange (TASE) that it will make a NIS 400 million write-down on properties held by subsidiaries. The size of the write-down could increase.
Arazim said that the write-down means that the company will not meet the financial covenants stipulated in its loan agreements with the banks, and that it has reopened negotiations with British banks on these covenants for both itself and its subsidiaries.
On Friday, Arazim reached a preliminary understanding with one UK bank on behalf of subsidiaries Atrium European Land Ltd. (ATX: ATR), Great Bradford Investments, Garret Advisors, and Kaldor Properties for changing the financial terms and the provision of reciprocal guarantees between various subsidiaries. The company cautioned that there was no certainty that a deal could be reached.
Arazim's share was traded at NIS 2.98, giving a market cap is NIS 29.2 million, when trading was suspended following the announcement. The company's share has jumped 60% since the beginning of the year, but is currently less than a tenth of its 52-week high of NIS 37.81. Shareholders' equity was NIS 101.2 million at the end of September 2009.
Arazim posted net operating income of NIS 205.9 million in January-September 2008, 6.3% less than in the corresponding period of 2007. However, the company posted a net loss of NIS 226.3 million in January-September, compared with a net profit of NIS 187.2 million in the corresponding period of the previous year.
Published by Globes [online], Israel business news - www.globes-online.com - on March 23, 2009
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