Yitzhak Tshuva and the representatives of Delek Real Estate Ltd. (TASE: DLKR) bondholders reached an understanding on a debt settlement on Friday. Tshuva agreed to grant an upside of 2-2.5% of Delek Group Ltd's (TASE: DLEKG) shares if their value exceeds a certain threshold - in other words, the bondholders will share in future profits from natural gas. The bondholders will also receive a NIS 53 million cash payment, rather than the previously agreed NIS 40 million.
There are still differences between the parties on the amount of the interest payments on the bonds. The difference is currently 2%.
During the five-hour meeting on Friday at the offices of Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) in Ramat Gan, Tshuva made frequent threats and walked out of the room three times, saying "I'm fed up. I'm leaving." Each time, a different person went after him and persuaded him to return.
A participant in the meeting told "Globes", "Tshuva is a world champ negotiator. He knows when to press, when to ease up, and when to tug on our heartstrings."
During the negotiations, Tshuva jokingly told the participants, "I have 17 grandchildren. Please leave me something."
The issue of the upside was settled by a more limited forum of three representing bondholders Harel Insurance, Menorah Mivtachim Holdings Ltd. (TASE: MORA) and Migdal Capital Markets Ltd. and Tshuva outside the meeting room. The upside can be priced at NIS 180-190 million.
As for guarantees, the parties agreed that Tshuva will provide personal guarantees against any decline in the value of the Israeli hotels that are the collateral for repayment of the debt to the bondholders in time.
Delek Real Estate CEO Eran Meital told the participants, "We cannot service the debt pursuant to the settlement signed because the company's position deteriorated earlier, and it is therefore necessary to lower the interest payment."
Last Tuesday, Tel Aviv District Court Judge Varda Alshech ordered Delek Real Estate and the bondholders to resume negotiations to reach a debt settlement within five days.
Delek Real Estate's share price rose 15.4% in early trading on the TASE to NIS 0.21, giving a market cap of NIS 80 million.
Published by Globes [online], Israel business news - www.globes-online.com - on April 22, 2012
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