An agreement has been reached between Africa-Israel Investments (TASE: AFIL) and its bondholders. After a marathon meeting that began at 7:30 yesterday evening and ended at 4:00 am this morning at the offices of Adv. Lipa Meir, and after investment house Psagot had threatened to withdraw from the proposed arrangement, the sides arrived at an agreement that was an improvement, from the bondholders’ point of view, of the proposal put forward by Prof. Amir Barnea. The injection of capital into Africa-Israel will be though a NIS 850 million rights issue, and the debt arrangement will cover the whole of the debt, i.e. there will be no haircut. This is after controlling shareholder Lev Leviev himself raised the amount he was prepared to inject into the company by NIS 100 million to NIS 700 million. Africa-Israel’s value was set in the agreement at NIS 2 billion, 25% below its market cap.
”As far as we are concerned, there is an agreement, and we have signed it with Leviev,” a senior source from one of the lending institutions told “Globes”. Sources also inform “Globes” that Africa-Israel has signed an agreement to sell the New York Times building in New York. The company is due to announce the sale in the next few days. It will strengthen its shareholders’ equity by another NIS 1.5 billion. At the end of the second quarter, Africa-Israel’s shareholders’’ capital was NIS 1.2 billion.
The agreement between Africa-Israel and the bondholders now needs to be approved by the banks, which have liens on Lev Leviev’s shares. The agreement also requires the approval of a bondholders meeting and the court.
Under the agreement, Africa-Israel will make a NIS 850 million rights issue, with Leviev injecting NIS 750 million of the cash and the public another NIS 100 million. Leviev will then hold about 52% of the shares in Africa-Israel (compared with 75% today), and the bondholders will hold about 33%. The bondholders will receive a payment of NIS 550 million in cash. The remaining details are in line with the Barnea proposal, and include the issue of a new two-year bond series bearing 4.5% interest against NIS 1.4 billion of the existing debt, and conversion of NIS 3.4 billion of the debt to a 16-year bond bearing interest of about 7%. After the agreement is implemented, the pubic will hold 14.2% of Africa-Israel. In addition, the bondholders will receive shares in Africa-Israel subsidiaries AFI Properties and AFI Development to the tune of NIS 1.2 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on October 30, 2009
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