Africa-Israel Investments (TASE: AFIL) continues to produce heavy losses, amounting to NIS 673 million in 2009. This is a bad figure, but an improvement on 2008, when the loss amounted to nearly NIS 5 billion.
Despite the huge losses and the debt arrangement the company has had to make with its bondholders, Africa-Israel's top management continues to enjoy exceptional conditions: CEO Izzy Cohen earned NIS 6.4 million; deputy chairman Nadav Grinshpon NIS 4.7 million; and AFI Development CEO Alexander Khaldey, NIS 3.8 million.
The company's quarterly report said that "as part of the company's streamlining efforts, and with the aim of helping the company in the measures it is taking to deal with global economic crisis and its effects on the Israeli economy, Izzy Cohen, Zvia Leviev Alazarov, vice president of marketing, and Nadav Grinshpon, have announced their decision to forego 10% of their salaries for 2009."
A spokesperson for the company said that "the salary figures published for Izzy Cohen and Nadav Grinshpon include a substantial element on account of options that are deeply out of the money, as detailed in the financial statements."
The crisis at Africa-Israel came about because of huge leverage financing real estate activity in Russia and the US, two countries still deep in economic trouble. In 2008, the company wrote down NIS 4.7 billion because of a fall in value of its real estate for investment, and in 2009, it wrote down a further NIS 3.4 billion.
The company's balance sheet is still problematic, and includes consolidated liabilities of NIS 23.5 billion. The parent company's liabilities are NIS 7.6 billion. The NIS 7.6 billion debt to bondholders is classed under current liabilities, since there are grounds for the bondholders to demand immediate repayment. On the other hand, the company paid off NIS 658 million owed to banks and investment institutions in 2009. The NIS 2.7 billion debt on the Times building in New York has been deducted from short term liabilities because of a reduction in Africa-Israel's holding in the asset. The company posted finance revenue of NIS 1.4 billion thanks to the change and restructuring of its debt on the Times project.
The company's report reveals the situation of private companies such as Alon Israel Oil Co, which made a loss of NIS 62 million in 2009. Africa-Israel swapped its stake in September for shares in subsidiary Alon USA Energy (ALJ.N). Africa-Israel's hotel activity made a loss of NIS 71 million in 2009.
Another losing unit is Vash Telekanal, which operates Channel 9, a television channel aimed at Israel's Russian speaking population. Africa-Israel owns 46% of the channel, a personal adventure by Lev Leviev from 2001, and supports it with loans and guarantees. In October, an agreement was signed for rescheduling the debt to an Israeli bank to which the channel owed NIS 35 million. The channel has a deficit of NIS 87 million on shareholders' equity, and accumulated losses of NIS 158 million. It lost NIS 6 million in 2009, 50% more than in 2008.
Published by Globes [online], Israel business news - www.globes-online.com - on March 31, 2010
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