Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), controlled by chairman Lev Leviev, and Elran (DD) Real Estate Ltd. (TASE:ELRE), controlled by Gadi and Dori Dankner are in talks to lease the Eilat Biblical theme park Kings City, after executive changes, recovery plans, and even toying with the idea of opening it on Saturdays have failed to save it. Africa-Israel and Elran each own 37% of Kings City, and private investors own the rest.
Kings City manager, Etzion Gever LP, is in dire straits, after losing NIS 58.4 million in January-September 2009, following its NIS 44 million loss in 2008. The company said that staying in business was dependent on implementing its management plan to open the amusement park on Saturdays and holidays.
Kings City is not in compliance with the financial covenants, and the bank has the right to demand immediate repayment of loans. Etzion Gever's debts total NIS 187 million, and it has a shareholders' equity deficit of NIS 56 million.
Kings City was opened in late 2005, and its main business is during the summer months.
Both Africa-Israel and Elran have been in financial difficulties, and lack the wherewithal to invest in Kings City. Africa-Israel was able to reach a debt settlement with its banks and bondholders. Elran Real Estate has not yet published its financial report for 2009, and its parent company Elran Investments Ltd. (TASE: ELIN) has not published financials for the third quarter of last year either. The TASE has suspending trading in shares of both companies.
The idea is for the tenant to operate the theme park for several years, and to also pay rent on part of the park's operating profit. If a deal is reach, the tenant will have to invest heavily to attract visitors. The number of visitors to Kings City has been falling steadily, from 424,000 in 2006 (who generated NIS 43 million revenue) to 320,000 in 2007 (generating NIS 35 million revenue), and 265,000 in 2008 (generating NIS 30 million revenue). Revenue totaled just NIS 18 million in January-September 2009.
Published by Globes [online], Israel business news - www.globes-online.com - on April 13, 2010
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