Palestinian takes over East Jerusalem property through co acquisition

Digal Investment and Holdings' main project is Nof Zion, near the promenade in the Armon Hanatziv area of Jerusalem.

Digal Investment and Holdings Ltd. (TASE: DIGL) bondholders yesterday accepted an offer from a businessman represented by Adv. Dov Weissglass as the basis for a debt settlement by the company. Weissglass was the director of the Prime Minister's Bureau for Ariel Sharon and also served as chairman of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ).

Sources inform ''Globes'' that Weissglass is representing a Palestinian businessman who holds a US passport and who is behind Cypriot company Techsal Trading Ltd. The offer chosen by Digal's bondholder includes a NIS 36 million cash payment at NIS 0.60 per NIS 1 nominal value bond. The buyer plans to convert the bonds into shares and delist Digal from the TASE.

Digal is financially troubled and its market cap is just NIS 5.2 million. The company's flagship project is the 395-unit Nof Zion project under construction near the Armon Hanatziv promenade in eastern Jerusalem.

Digal, which has a shareholders' equity deficit of NIS 18 million, did not make a NIS 30 million payment to the bondholders. The company's total bond debt is NIS 60 million, and it owes Bank Leumi (TASE: LUMI) NIS 84 million.

Digal posted NIS 7 million revenue in the first half of 2010. Its loss rose to NIS 12 million in the first half after it lost NIS 17 million in 2009 as a whole. The company's auditors appended a going concern warning to the company's financial reports.

Digal is controlled by Meir Shamir through Mivtach Shamir Holdings Ltd. (TASE:MISH), with a 34.6% stake, and Yehuda Levy, with a 38.2% stake. Meir Shamir announced in August that he would transfer Mivtach Shamir's entire holding in Digal to its bondholders. The transfer has not yet taken place.

Digal's share price rose 5.5% in morning trading to NIS 0.73.

Published by Globes [online], Israel business news - - on December 8, 2010

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

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