Over a year since Delek Real Estate Ltd. (TASE: DLKR), controlled by Yitzhak Tshuva, first asked its bondholders for a debt settlement, a deal has been reached. Most of the company's unsecured creditors, led by financial institutions, voted in favor of the proposed settlement. After Tshuva increased his contribution to it at last minute, Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) both agreed to the deal.
Yesterday, Tshuva increased the compensation to the bondholders by NIS 18 million to solve the dispute between them. The settlement involves a 65% discount on the NIS 2.15 billion owed to the bondholders, who will receive NIS 757-848 million: NIS 100 million in cash, which will be paid immediately; NIS 657 million in the new Series 1 bond, which will be repaid over six years, and bear 6% annual interest; and NIS 91 million in the new Series 2 bond, which will repaid in seven years. The final payment will only be made if the shareholder of Delek Group Ltd. (TASE: DLEKG), which Tshuva also controls, reaches NIS 1,200. Its share price closed at NIS 582 today.
Tshuva is also offering to pay Delek Real Estate shareholders NIS 21.5 million, even though he has no obligation to do so.
Delek Real Estate, which mainly operates in income-producing real estate in Western Europe, slid into trouble in 2008 with the collapse of the value of its properties, and its secured creditors called in their loans. At the time, the financial institutions rejected various proposals for debt settlements - settlements that today they can only dream about. The company's condition steadily deteriorated, but Tshuva personally injected capital into the company whenever its cash reserves ran out, and it was necessary to meet a payment. That ended last summer, when it officially requested a debt settlement and put an end to the rumor mill.
The bondholders' representatives will meet tomorrow evening, and the results will be officially published.
Published by Globes [online], Israel business news - www.globes-online.com - on September 10, 2012
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