Delek Real Estate Ltd. (TASE: DLKR, controlled by Yitzhak Tshuva with a 51% stake, has begun preparations to raise several hundred million shekels in a bond offering.
Delek Real Estate has not yet finalized the details of the offering, but Tshuva is weighing several options for guarantees to the bondholders, the rating, and the amount. New Delek Real Estate CEO Yarom Oren, who replaced Ilik Rozanski last month, will oversee the offering. Oren is supposed to stabilize the company, which massively expanded its property portfolio in the past few years, but took on huge debt to do so, which worsened its financing ratio.
Delek Real Estate's financial report for the second quarter shows the challenge. The company's short-term liabilities totaled NIS 6.2 billion at the end of June, and its long-term liabilities totaled NIS 15.8 billion. Its shareholders' equity financed less than 62% of its balance sheet. The company's debt-reduction plan includes property sales, despite the difficulties in getting fair prices for them.
The company's auditors drew investors' attention to the NIS 1.8 billion working capital deficit. Despite the crisis, Delek Real Estate has repaid NIS 236 million on the principal and NIS 83.5 million in interest to bondholders since the beginning of the year. The money came from NIS 678 million revenue from income-producing properties in the second quarter.
Delek Real Estate's share rose 7% today to NIS 4.60, giving a market cap of NIS 805 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 12, 2009
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