The struggle for Digal Investment and Holdings Ltd's (TASE: DIGL) Nof Zion residential project in Jerusalem is not abating. It is almost two months since Digal bondholders accepted an offer by supermarket owner Rami Levy and his Australian Jewish partner Kevin Bermeister to acquire control of the company as part of a debt settlement. The struggle took on a nationalistic character when the national-religious camp bought millions of shekels worth of Digal bonds in an effort to block a takeover attempt by Palestinian investor Bashar al-Masri.
Last night, Digal announced that Masri's lawyer, Dov Wiessglass, had signed an agreement to buy Mivtach Shamir Holdings Ltd's (TASE:MISH) 35% stake in Digal for NIS 1.2 million. Digal controlling shareholder Yehuda Levy, who owns 38.2% of the company (before the debt settlement, which has not yet come into effect), has first refusal rights to Mivtach Shamir's shares under a voting agreement between the parties.
Rami Levi told "Globes" today, "I will buy the shares by exercising the first refusal rights." Rami Levi and Yehuda Levy are relatives: Rami Levi's grandfather is the brother of Yehuda Levy's father.
In a separate announcement, Digal announced that its largest creditor, Bank Leumi (TASE: LUMI), notified it yesterday that it rejects the debt settlement. Digal owes the bank NIS 80 million. If Digal cannot reach a deal with Bank Leumi by Wednesday, the bank will ask the court to appoint a receiver for the company.
Financially troubled Digal cannot pay its creditors. The Nof Zion project in eastern Jerusalem, near the village of Jebel Mukhtar, is virtually the company's sole asset. The company failed in developing the project, whose construction began ten years ago, and only 91 of the planned 395 apartments have been built.
Digal's shareholders' equity deficit is NIS 18 million. The company has not yet published its financial report for the fourth quarter of 2010, and trading in its share has been suspended. The company owes its bondholders NIS 60 million. They were due to receive 60% of the debt (NIS 36 million) in cash as part of the settlement. Levi and Bermeister are due to invest NIS 123 million in Digal, including the payment to the bondholders.
Published by Globes [online], Israel business news - www.globes-online.com - on February 28, 2011
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