The representative of the Delek Real Estate Ltd. (TASE: DLKR) Series 25 Bond Adv. Guy Gissin says that the company's debt settlement offer amounts to a 73% haircut for the bondholders, not the 40% that Tshuva claims. At a press conference at his office in Tel Aviv today, Gissin offered an alternative proposal for Yitzhak Tshuva's troubled company.
Gissin says that Delek Group's (TASE: DLEKG) stake in Delek Real Estate rose from 63% to 80%, in June-October 2008, when it made a controversial distribution of a dividend in kind of the Delek Real Estate shares to Delek Group shareholders. A debt settlement was first proposed shortly afterwards in the wake of the sharp criticism of Tshuva.
Delek Real Estate currently owes the Series 25 bondholders NIS 580 million out of the company's total debt of NIS 2.1 billion to bondholders. The Series 25 bondholders claim that the dividend benefited Delek Group and Tshuva, while damaging them, and that this damage began even earlier, when Delek Real Estate distributed NIS 400 million in dividends in 2006-07.
The Series 25 bondholders' basic demand is that Tshuva keep his promise to inject NIS 220 million into Delek Real Estate through a rights issue, and to buy 25% of subsidiary Elad Israel Residential Ltd. Delek Real Estate's current bonds will be converted in three new bond high-interest series of NIS 200 million, NIS 400 million, and NIS 800 million, respectively, as proposed by Prof. Amir Barnea, and backed with various collateral. The bondholders will also receive 45% of Delek Real Estate's equity, and Tshuva will promise to make an offer to buy these shares for NIS 500 million in four years, as well as injecting an additional NIS 350 million within five years.
Published by Globes [online], Israel business news - www.globes-online.com - on November 27, 2011
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