While Delek Group Ltd. (TASE:DLEKG) controlled by Yitzhak Tshuva celebrates being the share with the highest rise on the Tel Aviv 25 in 2009, its subsidiary Delek Real Estate Ltd. (TASE: DLKR) continues to struggle. The company, which is directly controlled by Tshuva after Delek Group was split, today reported that it would not be implementing its plans for the time being to raise NIS 100 million through a rights issue using a shelf prospectus.
At the end of the third quarter of 2009 Delek Real Estate had huge debts of NIS 21 billion, and after cancelling the planned rights issue, the company is investigating alternative ways of raising capital. Meanwhile, Delek Real Estate announced that Tshuva will act as guarantor for a NIS 50 million loan from a bank, as intermediary financing for the coming three months, in exchange for future share allocations.
The cancellation of the rights issue, it is believed, comes in the wake of the demand by the Israel Securities Authority (ISA) for clarifications from Delek Real Estate about the shelf prospectus that it filed in August. Several weeks ago ISA investigators raided the company's offices in Ramat Gan and collected material on the subject.
As part of the investigation, the company's CEO Eran Mital and VP Daniel Levental, it is believed, were questioned as to how Delek Real Estate has been operating in recent years when the CEO was Ilik Rozanski. ISA investigators are reportedly planning to quesrtion additional senior figures at the company, both past and present.
The latest investigation was brought about by the sudden resignation of Mital's predecessor as CEO Yarom Oren, who had himself succeeded Rozanski. Oren announced that he was leaving last July after just eight months in the job.
Following the news, S&P Maalot lowered Delek Real Estate's rating by two levels from ilA to ilBBB and put the comany on Credit Watch.
Published by Globes [online], Israel business news - www.globes-online.com - on December 31, 2009
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