After reaching a debt restructuring agreement with bondholders, Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY.PK) faces losing a very significant project, as the Ministry of Finance continues toward cancelling the Tel Aviv light rail project.
Africa-Israel owns 20% of the MTS consortium which won the contract to develop the project.
The Ministry of Finance has called MTS to a special hearing in a few weeks. A Ministry of Finance spokesman said that the ministry is considering cancelling the project due to the "extended delay and failure, so far, by the franchisee to raise the necessary funding for the project."
At the hearing, MTS will be asked to present how it intends to secure the financing for the project, in a short time frame, and to complete its requirements.
It appears that the dream of a Tel Aviv light rail is again pulling away from the city's residents, this time because of the franchisee, MTS.
"Globes" reported ten days ago that the government was considering cancelling the current tender for the project and that the Ministries of Transport and Finance were developing an alternative proposal which would leave out the private sector altogether.
MTS had committed to closing the funding for the project by May, 2008, but it has dragged out until now. Recent talks broke down due to the financial difficulties of Africa-Israel.
The hearing will also include Accountant General Shuki Oren, Budget Director Udi Nissan, and Ministry of Transport director general Yaakov Ganot.
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2009
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