Banks defend payments from Leviev

The banks claimed the funds don't hold up a bondholder deal, but actually push it forward.

The banks which received debt repayments of hundreds of millions of dollars from Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY.PK) controlling shareholder Lev Leviev responded today to calls by some Africa-Israel bondholders to halt the payments.

Earlier this week, Leviev paid NIS 670 million to the banks, including NIS 400 million to Bank Hapoalim (TASE: POLI). Soon after, Africa-Israel Series 9 bondholders turned to the court to stop the payment. Judge Varda Alshech harshly criticized the transfer, and the banks themselves.

Yesterday, Bank Hapoalim responded, saying the payment did not show preference for one creditor over another, and that the claims were misleading to the court.

Today, the banks made three basic claims:

  • The request to the court to stop the funds transfer was not relevant, since at the time the petition was made to the court, it was already a "done deal", since the funds had already been transferred.

  • The payments were made under a separate and independent agreement with Leviev to settle his bank debts. The agreement stands whether or not a debt restructuring deal is reached with bondholders.

  • Any deal with bondholders requires the banks' approval, since Leviev's shares were put up as collateral with the banks. Therefore, claim the banks, not only does the payment not hold up a bondholder deal, but actually pushes it forward.

    Shares in Africa-Israel fell 0.1% to NIS 43.50 around midday. Despite months of financial difficulties, the share is up over 45% for the year to date.

    Published by Globes [online], Israel business news - www.globes-online.com - on December 16, 2009

    © Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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