Following marathon overnight negotiations between Lev Leviev-controlled Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY.PK) and its bondholders to reach a debt deal, sources inform "Globes" that a majority of institutional investors supports the deal.
The deal was reached hours before a hearing on Africa-Israel at the Tel Aviv District Court. That hearing has now ended, and Judge Alshech will announce her decision tomorrow morning. All the parties in the case made their arguments about the new debt settlement. Most of the bondholders, with the exception of Psagot, have declared their support of the settlement.
Insurance companies Menorah Mivtachim Holdings Ltd. (TASE: MORA), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) all support a deal, and only Psagot Investment House Ltd. still opposes it. Even without Psagot's support, there is a majority backing the deal.
At the beginning of the hearing, Judge Alshech suspended the hearing and retired to her chambers, after bondholder Adv. Aviad Visoly requested that Alshech recuse herself from the case because her husband is a director in First International Bank of Israel (TASE: FTIN1;FTIN5) parent company FIBI Holdings Ltd. (TASE: FIBI). Visoly claimed that First International Bank was a creditor of both Africa-Israel and of chairman Lev Leviev's private company Memorand Management (1998) Ltd., though which he controls Africa-Israel.
Alshech said, "I can only regret the request for a recusal made during the hearing. It's hard to understand why Adv. Aviad Visoly waited with his argument, and held his cards close to his chest until today. This harmed the court hearing. My husband, Yossi Alshech, categorically has no interest in the hearing. As explained by Adv. Dalia Tal, there is separation between parent company and its board of directors and the subsidiaries. The salary of a director is fixed, and my husband has no financial interest in the hearing. In addition, First International Bank is not a creditor of the company itself."
All the attorneys at the hearing rejected Visoly's demand, and Alshech, before retiring to her chambers, said that she would not recuse herself from the case.
During the hearing, Alshech said, "The fate of Africa-Israel and its credit is an anticlimax to what has happened here. It's always necessary to threaten you with a court hearing, which is why you met last night.
Africa-Israel's attorney, Adv. Amit Pines, presented the principles of the new debt settlement. He said, "We tried to adhere to two principles: the first is the principle of equality, which the company and the joint representatives faced; and the second is that the relatively short-term bond series should get added benefits for the Series 9 Bond, whose original maturity date passed during the negotiations. The settlement gives proper, fair, and worthy recognition, and has a proper legal basis. The bondholders have been given cake, and the company should have stood aside and been indifferent to this, but it nevertheless made a supreme effort and it will add NIS 76 million to the long-term bond component of the debt settlement."
Africa-Israel is leaning toward increasing compensation to short-term bondholders. The Series 9 bondholders will get NIS 200-250 million in cash, and the holders of bonds that are due to mature during 2010 will get an additional NIS 100 million in cash. Africa-Israel will also have to add NIS 80 million to the NIS 550 million cash component of the original settlement. The short-term bondholders will therefore receive more cash and fewer of the new long-term bond that the company will issue as part of the settlement, while the long-term bondholders will receive less cash and more of the new bond issue.
Africa-Israel's share rose 11.4% by early afternoon to NIS 47.73.
Published by Globes [online], Israel business news - www.globes-online.com - on December 20, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009