Tel Aviv District Court Judge Varda Alshech today ruled that the bondholders of Delek Real Estate Ltd. (TASE: DLKR) will hold separate bondholder meetings for each bond series. The judge accepted the company's position on this issue, ruling against the holders of the company's short-term bonds.
However, Alshech dismissed the position of Delek Real Estate and the representatives of its Series E long-term bond, which accounts for 65% of the company's debt, on how the votes will be counted. These bondholders are mostly investment institutions. She ruled that the trustee of each bond series will hold a preliminary bondholder meeting, prior to the general meeting, to discuss the position of the bondholders, mostly private individuals, and how to vote.
The goal of the decision is to give the private bondholders a voice in accordance with their holding in Delek Real Estate. This is an innovative ruling intended to protect the company's private investors.
In addition, Judge Alshech sent a message to Delek Real Estate controlling shareholder. She ruled that as a condition for exempting him from personal liability as part of the debt settlement, he will have to inject additional capital in favor of the bondholders. "It would be a good idea for Tshuva to put his hand into his pocket, even deep into his pocket, and redeem the right of claim in an amount greater than his previous proposals for a debt settlement. In this way, he will also make it easier for the opponents to accept and approve the settlement," she wrote.
The Delek Real Estate debt settlement has three main parts: the issue of a new bond to replace the existing bonds, with a much longer repayment schedule; conversion of debt with equity; and a capital injection by Tshuva, reportedly amounting to several hundred million shekels.
Delek Real Estate's Series D and E bondholders have approved the settlement, but the Series 25 bondholders have not. Alshech subsequently added Tshuva as a personal respondent in the company's liquidation procedures.
Delek Real Estate's share price fell 2.6% today to NIS 0.188, giving a market cap of NIS 76 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2012
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