IBI Investment House analyst Shay Lipman says that closing the sale of 47 US shopping centers by Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT) for $1.43 billion "will buy the company time, which is the most important thing for it."
The sale "has no profit significance in terms of debt repayment, and only cash flow importance."
Lipman estimates that Elbit Imaging and its subsidiary Plaza Centers NV (LSE:PLAZWSE:WLZ) will each see $112 million in cash flow from the sale. "We cannot ignore the large and quick creation of value achieved by this deal, especially considering the relative high shekel-dollar exchange rate," he adds.
Lipman says that Elbit Imaging will be able to repay its NIS 110 million mezzanine loan, which bears 11.4% interest, with the proceeds at the closing of the sale, which would appear to be the right decision. Elbit Imaging will have NIS 315 million, which it can use to pare down its bond debt.
Lipman concludes, "The risk in investing in the bonds still exists, but meeting the strategic plan for the next two years sees realistic. We therefore reiterate buying Elbit Imaging bonds, which appear to have a reasonable risk/reward ratio at the current yield."
Published by Globes [online], Israel business news - www.globes-online.com - on January 11, 2012
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