Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) will attract considerable investor attention after late Thursday night, the company notified the Tel Aviv Stock Exchange (TASE) that subsidiary Africa-Israel Properties Ltd. (TASE: AFPR) will report a loss of NIS 250 million for the second quarter and that its Russian development subsidiary, AFI Development plc (LSE:AFID) will report a write-down of NIS 850 million. The loss and write-down follow an Israel Securities Authority review of Africa-Israel Properties' properties in Russia and Eastern Europe.
In the wake of the announcement, Africa-Israel Investments' bondholders will meet at 4 pm today to discuss the repercussions of the profit warning. Africa-Israel CEO Izzy Cohen will attend the meeting.
Africa-Israel Investments' debt settlement may need restructuring, just two weeks before the shareholders are due to approve it. The bondholders' representatives will hear the company's proposals to improve the settlement in the wake of the profit warnings.
Africa-Israel Investments' institutional investors will reportedly receive an additional 5% in Africa-Israel Properties' shares, which handles the company's real estate activities in Eastern Europe through AFI Europe NV. 5% in Africa-Israel Properties is currently worth NIS 60 million.
The bondholders will still receive 17.7% of AFI Development, unchanged from the original deal, because the settlement states that no change will be made in the number of shares in the company that will be transferred. If necessary, the bondholders will receive additional shares in Africa-Israel Properties only.
The write-downs took the bondholders unawares at a critical and highly pressured moment. Africa-Israel's shareholders are due to approve the debt settlement structure at a general meeting on March 14. The Tel Aviv District Court also has to approve the debt settlement. The company's institutional investors are reportedly in no hurry to wreck the settlement structure.
The TASE was closed yesterday for the Purim holiday, so that the shares are first reacting to the news today.
Africa-Israel Investments' share price fell 4.4% in early trading today to NIS 38.80, giving a market cap of NIS 2 billion. Africa-Israel Properties' share price fell 1.3% to NIS 56.50, giving a market cap of NIS 1.14 billion. AFI Development's share rose 0.5% at the opening in London to $1.96.
Published by Globes [online], Israel business news - www.globes-online.com - on March 1, 2010
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