Sources inform ''Globes'' that Entropy Consultants Ltd. has changed its position to favor the debt settlement of troubled Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL), controlled by chairman Yosef Maiman, a week after publishing an opinion opposing the settlement. Entropy apparently changed its position after Maiman agreed to several changes in the proposed settlement, which had included his demand to include a clause exempting him from claims.
In December 2011, Ampal announced that it could not meet the payments on its NIS 870 million bond debt, and it has been in talks with the bondholders ever since. The company is now in dire shape, with a market cap of just $8.6 million, and the prices of its three bonds reflect a yield of junk bond status up to 1,020%.
The core of Ampal's proposed debt settlement is a two-year moratorium on payments on the bonds' principle. Meitav Investment House Ltd., Migdal Capital Markets Ltd., Epsilon Investment House Ltd., and Analyst IMS Investment Management Services Ltd. (TASE:ANLT) are leading the opposition to the proposed settlement, and were recently joined by Israel's largest investment house, Psagot Investment House Ltd. Ampal's bondholders are due to notify the company of their decision on the proposed settlement on Wednesday. If they reject it, Ampal is liable to be liquidated.
Last week, Entropy stated in an opinion, "The net capital inflow by the shareholder in the proposed settlement is worthless. The controlling shareholder will inject $6 million into Ampal, whereas his company, Merhav Group will be eligible for 'reimbursement of expenses' amounting to $3 million a year over two years."
Ampal has two main assets: a 12.5% stake in Egyptian natural gas exporter to Israel, East Mediterranean Gas Company (EMG), the value of which Ampal reduced to zero in its books, after the Egyptian government cancelled the company's contract; and 100% of Gadot Chemicals Tankers and Terminals Ltd.
Since acquiring control of Ampal a decade ago, Maiman has taken a cumulative salary of $14.4 million from it, and his close associate, CFO Irit Iluz, has received $10.1 million in compensation. Most of Maiman's gain from Ampal came through parties at interest deals, in which Merhav sold shares in EMG to Ampal and investment institutions for NIS 1.3 billion in cash in 2005-07.
Ampal's share price rose 1.1% by mid-afternoon on the TASE today to NIS 12.40, after rising 1.3% on Nasdaq on Friday to $3.07.
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012