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Scorpio denies illegal creditor preference

1 Jun, 2010 17:07
שלח תגובה במיילHillel Koren

The bondholders are demanding immediate interest and principal bond payment of NIS 122 million.

Benny Steinmetz-owned Scorpio Real Estate Ltd. (TASE: SCRP.B1) denies the company's bondholders' claims of illegal creditor preference.

Scorpio's attorney, Ram Caspi sent a letter to the bondholders' attorneys, expressing his anger at their claim that if Steinmetz decides to inject capital into the company, or provide guarantees, directly or indirectly, this would be tantamount to illegal creditor preference.

Caspi rejects the argument, in part because the bondholders' attorneys have not raised it during the negotiations. He also claims that while Steinmetz has been trying to aid Scorpio, the bondholders have been blocking a debt settlement.

The bondholders are demanding immediate interest and principal bond payment of NIS 122 million. Otherwise, they threaten to call in the bonds, bankrupting the company and forcing it into liquidation.

Scorpio owes the bondholders NIS 571 million and Bank Hapoalim (TASE: POLI) NIS 355 million. Steinmetz has offered to inject $100 million into the company, in exchange for a personal guarantee to Bank Hapoalim. The bank in turn would reschedule the debt payment. Bondholders would receive partial payment now, and the rest would be rescheduled through 2019.

Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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