Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) is considering offering bondholders shares in subsidiaries Africa-Israel Residences Ltd. (TASE:AFHS), Africa-Israel Industries Ltd. (TASE: AFID), and Danya Cebus Ltd. (TASE: DNYA) in exchange for rescheduling debt or even partly forgiving them. The idea came up during preliminary talks between Africa-Israel's management and the bondholders' representatives for a bond settlement.
Africa-Israel's current aggregate debt is about NIS 26 billion, to which future interest and linkage has to be added. This debt includes NIS 7.4 billion in bonds, which will rise to NIS 9 billion when future interest is added. The company was selling off assets, but stopped when it realized that, at current market prices, it would be left with no assets at all, and the proceeds might not even cover the debt.
Earlier this month, Africa-Israel announced that it wanted to reach a debt settlement with its creditors, although it has not yet disclosed a proposed structure for such a deal. The process has been accompanied by threats of liquidation. The representative of a large bondholder told "Globes", "[Africa-Israel chairman Lev] Leviev is bankrupt, but doesn’t realize it."
Nominees to become the bondholders' representatives who will negotiate with Africa-Israel were submitted yesterday. In the coming days, bondholders will make two critical decisions: will there be separate representatives for each bond series, or a single representative body for all 13 bond series; and the composition of the representative body. Sources believe that the bondholders will probably decide on one representative body for the short-term bonds, and a second body for the long-term bonds. The decisions will be announced next week.
Leader Capital Markets analyst Alon Glazer supported Leviev yesterday, saying, "This isn't a company that should be liquidated, or taken away from Leviev's control. Unlike other companies, it's important to keep Africa-Israel's ownership, at least for some of its assets." He stressed the importance of Leviev's experience and connections in Russia, saying, "This is a country where considerable future creation of value is possible."
Africa-Israel's share rose another 8.6% in early trading today, to NIS 43.56, after jumping 13.9% yesterday.
Published by Globes [online], Israel business news - www.globes-online.com - on September 17, 2009
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