Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) has summoned a bondholders meeting for next Sunday at Beit Hahayal in Tel Aviv. Holders of all of the company's 13 bonds traded on the Tel Aviv Stock Exchange (TASE) have been invited. Last week, the company announced that it would have trouble meeting its debt payments in the coming years, an announcement that has led to a 40% drop in the company's share price.
In a notice to the TASE last night, Africa-Israel said that the bondholders would discuss the appointment of a joint representative body for holders all bond series, and the election of members of this body.
At a press conference last week, Africa-Israel CEO Izzy Cohen said, "Over the past few weeks, the company has been thinking about how to be fair to the bondholders. Last night, Africa-Israel's board approved opening a dialogue with the bondholders' representatives, and we hope that we can reach a settlement for the good of both sides."
It now seems that Cohen's words are starting to be translated into action.
The bondholders meeting will also discuss the possibility of a settlement under Article 350 of the Companies Law. This article covers the procedure by which a company or its creditors (the bondholders in the case of Africa-Israel) can apply to the court for a stay in proceedings. The court can order a stay in proceedings of up to nine months, during which time legal proceedings against the company cannot be initiated without court approval. The court can also issue the order if it believes that it will help the company's recovery.
This is precisely the point. Africa-Israel may have enough assets to repay its debts, but no one knows at this time the exact value of all of the company's assets. If there is an economic recovery while a stay of proceedings is in effect, the company may be able to obtain full value for its assets.
In November, Africa-Israel is due to pay NIS 500 million in principal and interest payments on its bonds.
Africa-Israel's share fell another 4.6% in early trading on the TASE to NIS 37.51.
Published by Globes [online], Israel business news - www.globes-online.com - on September 7, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009