Premium (PIH) Holdings Ltd. (TASE: PIH) subsidiary Central European Estates NV (CEE) (TASE:CNERO.B1) has defaulted on its bond payments, nine months after the death of its former controlling shareholder Yuli Ofer. The company today announced that it will not make a NIS 46 million interest and principle payment on its bonds, due in August. Yuli Ofer's widow Ruth Ofer owns 52% of CEE, which owes its bondholders NIS 120 million.
At bondholders' meeting at the company's attorneys today, CEE founder and chairman Nimrod Rinat said, "My goal is to service the debt to the bondholders. That is my life's work, and do not intend to give it up." Rinat brought Yuli Ofer into the company, and he supported it financially, keeping it solvent for years.
Yuli Ofer personally met all of CEE's bond payments, but the capital dried up with his death in September 2011. Prices for CEE's bonds collapsed and their yield soared to thousands of percent. At the company's last bondholders meeting, Rinat said that its new controlling shareholders would not inject more capital into it.
CEE's lost NIS 43.5 million in 2011, its shareholders' equity deficit is NIS 85.7 million, and its working capital deficit is NIS 168 million. The company has just NIS 100,000 in cash, and already defaulted on a NIS 36 million bank loan due last October and a NIS 5 million loan due in January.
Published by Globes [online], Israel business news - www.globes-online.com - on June 7, 2012
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