While the bondholders of real estate company Arazim Investment Ltd. (TASE: AZRM) continue to squabble about whether to accept the company's offer of a debt settlement, the company's bank in Germany is threatening to foreclose on properties on which it has liens. These properties amount to the bulk of Arazim's activity in Germany.
Arazim, controlled by chairman Meir Gurvitz, was due to repay €52.3 million NIS 261 million) in loans to the bank at the end of March, but failed to do so. Two months ago, Arazim announced, "If no agreement is reached in negotiations to extend part of the loan agreements with the bank, the company has no intention of repaying the loans on time."
Today, in a notice to the TASE, Arazim said, "The parties failed to reach an agreement after prolonged negotiations with the creditor bank over the weekend on the issue of extending the deadline for repaying the loan principle. Since the company and its subsidiaries have no intention of repaying the loans, and if no agreement is reached with the creditor bank in the coming days, there is material concern that the credit bank will immediately call in the loans, in which case it is liable to exercise a lien on 2,119 apartments used as collateral under the loan agreements, out of the 2,681 apartments that the company and its subsidiaries own in Germany."
The apartments are in the Ruhr city of Dortmund. In its financial report for 2009, Arazim booked the value of the apartments at NIS 471 million. The company's rental income from these apartments was NIS 62 million in 2009, 26% of its total revenue.
The apartments have an aggregate area of 159,000 square meters. They are very low-cost apartments, generating an average rent of €250 per month. 84% of the apartments are occupied, and Arazim reported that its operating cost on the properties had risen.
Arazim's share price fell 7.4% today to NIS 6.40, giving a market cap of NIS 67 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 23, 2010
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