Roy Vermus was right. The Psagot Group CEO always said that Lev Leviev would have to pay at least NIS 1 billion in order to retain control of Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY). And indeed we now see Leviev paying NIS 1 billion, not to institutional investors but to the banks so as to reduce his personal debt.
Here are the numbers: Leviev will pay NIS 300 million on signing the debt arrangement and another NIS 450 million between now and 2014. In exchange for an additional payment, he will receive additional shares in Africa-Israel. Leviev will make an immediate payment of NIS 700 million to the banks to reduce the debt of Memorand, the private company that he controls. This entire episode has been a great example of the real balance of power between financial institutions and the banks. Financial institutions talk while the banks do.
The negotiations between Leviev and the banks were short and violent. The banks were not distracted by offers, counter offers, and speeches to the media. Nor did they climb high trees and then have to explain why they had come back down. The banks simply demanded that Leviev put cash on the table and also required him to strengthen his collateral now.
For his part Leviev did not play any games. He did not try any bureaucratic tricks, nor did he hire any public relations advisors to send the banks complicated offers. Leviev and his right hand man Nadav Greenspan conducted fast-track negotiations and in the end more or less accepted what the banks were demanding.
Then it became clear what Leviev was really bothered about. Not the institutional investors and their threats of breaking up Africa-Israel and certainly not the Series 9 bondholders who fell between two stools.
Leviev was only concerned about the banks and he fully understood not to mess around with them. It is now clear that if you push Leviev up against a wall then he does have money, not for Africa-Israel, but rather to cover his personal debts.
Thus Roy Vermus was right. Leviev does have the wherewithal only he prefers to give what he has to the banks, which is right from his point of view.
Published by Globes [online], Israel business news - www.globes-online.com - on November 16, 2009
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