Mizrahi Tefahot Bank (TASE:MZTF) has scuttled the debt settlement proposed by Subaru importer Japanauto Holdings Ltd. (TASE:JPNT.B1), sending the company's bonds down sharply on the TASE.
Last month, sources believed that Mizrahi Tefahot Bank would torpedo the proposed debt settlement for Japanauto. The bank is the main creditor for Japanauto subsidiary Japanauto Cars, which handles the imports.
In a notice to the TASE today, Japanauto said that Mizrahi Tefahot Bank rejected the proposed settlement.
Japanauto's auditor attached a going concern warning to the company's financial report for the second quarter of 2012, due to its deteriorating financial condition. The auditor said that the company was not in compliance with its financial covenants with the banks.
Japanauto reached an agreement with its bondholders to postpone payments on the principal of the bonds for two years, and to repay them in semiannual payments in 2014-19. Since February, the company has been NIS 20 million in arrears on its interest and principal payments, a fifth of the company's estimated NIS 100 million bond debt.
Published by Globes [online], Israel business news - www.globes-online.com - on October 22, 2012
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