"The Wall Street Journal" reports that Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) has reached a tentative debt settlement for the old New York Time Buildings, which it acquired in 2007. The deal that will wipe out more than $400 million in debt.
Africa-Israel's US unit Africa-Israel Investments Inc. bought the building on Times Square in Manhattan for $525 million and then added $715 million in debt on the property. "The Wall Street Journal" cites sources as saying that Africa-Israel will transfer half of its ownership in the building to one of its creditors, private-equity firm Five Mile Capital Partners LLC. The new money will be used to repay existing debtholders, which are expected to take a major loss.
The sources said that, under the tentative deal, the building's mortgages of $475 million and $240 million will be reduced to $250 million senior loan. The building, which Africa-Israel had planned to convert to high-end office space, will instead be converted into a hotel, retail space and condominiums.
On October 30, when Africa-Israel announced that it had reached a debt settlement with its bondholders in Israel, "Globes" reported that the company had reached a deal with its creditors in the old New York Time Building, which would strengthen the company's shareholders' equity by NIS 1.5 billion. This fact was one of the factors that facilitated progress in negotiations with the institutional investors.
According to "The Wall Street Journal", the major losers in the debt settlement on old New York Time Building are Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ), BlackRock Inc. (NYSE: BLK), and CIT Group Inc. According to Norwegian news Norwegian news service "Norwatch", the UK arm of BlackRock sold its Africa-Israel shares following pressure from three Scandinavian banks over construction in West Bank settlements. BlackRock denies the report, saying that all transaction are purely for business reasons.
"The Wall Street Journal" also said that Mexico's Banco Inbursa SA, controlled by Carlos Slim, will keep the full $250 million of its senior debt on the property, and will additionally provide $75 million to improve it.
The 750,000-square foot old New York Times Building was built in 1913 and was the headquarters of "The New York Times" until it moved to new premises up nearby in 2007.
Africa-Israel's share rose 4% in morning trading to NIS 46.80.
Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2009
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