Ampal proposes new debt arrangement

Bond principle payments will be postponed, and Yosef Maiman will inject $6 million.

Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL), controlled by chairman Yosef Maiman, has published a new proposal for a debt settlement with its bondholders, and announced a reverse stock split of its shares.

The proposal includes postponing payment of the principle on all of the company bonds by two years, and a $5 million payment to bondholders by June 30, 2013 ($1.25 million to holders of the Series B Bond, and the rest to holders of the other bonds). Interest payments will continue on schedule and the interest rate on all the bonds will be increased by 1.25% a year during the postponement period.

Under the proposed arrangement, Ampal's bondholders will receive 23% of the company's shares, which will reduce Maiman's holding in the company to 51%. Maiman will forego his salary during the two-year postponement period. Before then, his salary will be halved and the balance will be paid in company shares.

Maiman will grant Ampal's bondholders a put option, exercisable between March 1 and September 1, 2013, allowing them to compel Maiman and the company that owns the ethanol project to repay Ampal a $22.5 million, plus interest as of the date of the actual payment, under the original terms of the loan.

Maiman will inject $6 million into Ampal through the transfer of his 24% holding in Eltek Ltd. (Nasdaq: ELTK) in exchange for an allotment of $3 million worth of Ampal shares, when the settlement is approved.

Maiman promises not to transfer control of Ampal to a third party before the end of the postponement period on the bond payments.

Ampal will attach its 12.5% holding in Egyptian natural gas exporter to Israel East Mediterranean Gas Company (EMG) in favor of Ampal's bondholders. If Ampal sells the holding, it will distribute the proceeds among Ampal's bondholders. Ampal also proposes putting up as collateral 24% of its holding in the ethanol project company, a loan given to Ampal for the ethanol project, money from Ampal's lawsuit filed against the Egyptian government for halting gas deliveries by EMG, 37% of Lev Hamifratz Ltd., 24% of Eltek, and a lien on the shares of Ampal Energy Ltd.

Ampal undertakes to publish, around the same time as the publication of its financial reports, cash flow projections for the next two years from the date of each financial report, to demonstrate the company's ability to meet its commitments, including payments to the bondholders, during this period. Ampal will not distribute dividends until at least half of the principle to the bondholders is repaid.

Ampal's bondholders will have the right to demand immediate repayment of the bonds one year after agreeing to the settlement, if the company fails to create value through its holdings in Gadot Chemical Tankers and Terminals Ltd., the ethanol project in Colombia, or the resumption of gas deliveries by EMG.

In a separate announcement, Ampal announced that its board of directors had approved a 1-20 reverse share split, in order to raise the company's share price on Nasdaq to over $1, to regain compliance with Nasdaq Capital Market listing requirements. The reverse split will come into effect at 5 pm Eastern Standard Time on July 20. Trading in the share on the reverse split basis will begin on June 23 on both Nasdaq and the TASE. The reverse split, which Ampal's shareholders approved at the annual shareholders' meeting on May 29, will reduce the outstanding number of shares from 56.1 million to 2.8 million.

Ampal's share price rose 2.7% by midday on the TASE today, following the announcements, to NIS 0.49, after falling 3.2% on Nasdaq on Friday to $0.12, giving a market cap of $6.7 million.

Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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