Scorpio threatens going concern warning

Benny Steinmetz-controlled Scorpio Real Estate Ltd. (TASE: SCRP.B1) yesterday threatened its bondholders with a going concern warning, unless they approved postponement of the upcoming interest payment on its bond. The threat was made at the bondholders meeting in Tel Aviv.

Scorpio chairman David Granot said, "A going concern warning will damage the company's operations and affect relations with vendors. The bondholders will also suffer."

Last month, Scorpio proposed a five-year postponement in paying the bond principal, from January 2010 to January 2015. The company owes bondholders and Bank Hapoalim (TASE: POLI) about NIS 1 billion. In exchange, Steinmetz proposed merging a private real estate company with Scorpio, and placing a lien on properties in favor of the bondholders against an additional $60 million credit line. The bondholders will be able to convert Scorpio bonds into shares, which will be traded on the TASE.

The bondholders have so far rejected the proposal.

Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2009

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