Tensions between the representatives of the Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) bondholders are expected to peak this evening when they meet to discuss chairman Lev Leviev's new offer. Sources inform ''Globes'' that if the representatives accept the offer, Psagot Investment House Ltd., the largest holder of Africa-Israel bonds and the bondholder taking the hardest line, may quit the group.
Yesterday morning, Adv. Lipa Meir, the legal counsel to the bondholders, met Leviev at his office in the Ramat Gan Diamond Exchange. Leviev submitted a proposal to Meir and told him that if the representative body submitted it to the company, it would be accepted.
Under the new proposal, Leviev will inject NIS 700 million into Africa-Israel, NIS 100 million more than in Africa-Israel's official offer made by Prof. Amir Barnea last week, and remain with a 56.4% stake in Africa-Israel, while the bondholders will own 37.5%.
Although a majority of the bondholders, including Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), and Menorah Mivtachim Holdings Ltd. (TASE: MORA), are leaning toward accepting Leviev's new offer, Psagot has rejected it. Psagot, under CEO Roy Vermos, wants to make a counter-offer.
Psagot's main objection to the current Africa-Israel offer is over Leviev's capital injection into the company and the valuation at which it will be made. Psagot wants Leviev to inject NIS 800 million at a company of NIS 1.2 billion, which would result in Leviev owning 51.6% of the company and the bondholders owning 38.7%.
If Psagot quits the bondholders' representative body, it will have three options. It could take independent legal action, and seek a court-ordered debt settlement. Alternatively, it could wait for the debt settlement proposed to come to for a vote at the bondholders' meeting, where the settlement can be rejected if more than 25% of the bondholders vote against it. Psagot owns 10% of the nominal value of Africa-Israel's bonds, and it has the power to affect the result of the vote.
The third option is to ask the bondholders, at the meeting, to dissolve the current representative body, and appoint a new one.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2009
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