One week before the deadline for reaching a debt settlement, talks between Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) and its bondholders made small progress as chairman Lev Leviev today raised his offer to inject capital into the company to NIS 650-700 million. His previous offer, set out in the proposal by Prof. Amir Barnea was a maximum of NIS 600 million. The higher offer is subject to concessions by the bondholders' representatives.
In recent days, Africa-Israel suggested raising Leviev's capital injection by about NIS 50 million, and the current offer raises it a bit more.
The capital injection would be at a company value of NIS 2 billion for Africa-Israel. However, Psagot Investment House Ltd., a bondholder that has taken a hard line position, is insisting that the valuation for the injection be NIS 1.2 billion.
Africa-Israel's share rose over 5% in early trading to around NIS 50, giving a market cap of NIS 2.6 billion. The share has risen 57% since the beginning of the year, but has been quite volatile.
Africa-Israel's value is a critical point in the negotiations, because it is the baseline for deriving Leviev's capital injection into the company and the amount of debt that will be converted into equity. Barnea estimates the company's value at NIS 2.7 billion, including NIS 1.2 billion in shareholders' equity in its solo balance sheet. The additional NIS 1.5 billion is the difference between the company's investment in the Old New York Times Building in Manhattan, and the debt taken to buy it.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2009
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