Shaya Boymelgreen is close to a signing a debt rescheduling deal. Sources inform ''Globes'' that Boymelgreen Capital Ltd. (TASE:BMGN) is close to a deal with its largest creditor, Mizrahi Tefahot Bank (TASE:MZTF), as well as with the institutional investors that hold the company's bonds.
Under the pending deal, Mizrahi Tefahot Bank will reschedule payments on Boymelgreen Capital's debt, which total NIS 650 million, in exchange for an increased personal guarantee by Shaya Boymelgreen. The bondholders will convert part of their bonds to shares. Boymelgreen Capital's current market cap is NIS 32 million. None of the bondholders are expect to reject the deal.
In a few days, Boymelgreen Capital is due to pay Mizrahi Tefahot Bank a NIS 10 million interest payment, and it is reportedly unable to do so. Under the pending deal, the bank will reschedule the debt payments over several years, which will give the Shaya Boymelgreen some room to maneuver and enable him to pursue the streamlining of Boymelgreen Capital subsidiary Azorim Investment, Development and Construction Ltd. (TASE: AZRM).
Boymelgreen Capital's bondholders, which are owed NIS 400 million, are expected to reach a deal with the company following the deal with Mizrahi Tefahot Bank. The company's bonds are currently traded at a yield of several hundred percent. They are expected to convert part of the bonds into shares, which will dilute Shaya Boymelgreen's 89.8% stake in the company. The institutional investors have no intention of taking over the company.
In an extraordinary measure, Boymelgreen has agreed to bear the cost of bondholders' financial and legal counsel, which could exceed NIS 100,000.
Azorim is undergoing streamlining measures that include layoffs. The company's heaviest burden is Lagna Holdings Ltd. (TASE;LGNA), which, through its subsidiaries, develops properties in the US, Europe, and Israel. The highly leveraged company is in financial trouble, which is affecting Azorim. Azorim made a write-off of more than NIS 200 million on its investment in Lagna in the financial report for 2008
Boymelgreen Capital said in response, "The company has no intention of disclosing information about the pending agreement with the bondholders, or responding to rumors spread by institutional investors for their own purposes."
Boymelgreen Capital's share fell 0.6% today to NIS 7.95. The share ended 2008 at NIS 10.04, and is down from NIS 54.25 a year ago.
Published by Globes [online], Israel business news - www.globes-online.com - on April 27, 2009
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