"We are not meeting the terms of our loan with Bank Hapoalim," Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT) CFO Doron Moshe told bondholders at a meeting at the ZOA House in Tel Aviv yesterday. Bank Hapoalim (TASE: POLI) is demanding that the real estate company, controlled by president and CEO Mordechay Zisser, increase its collateral for a $64 million loan, because of the plunge in the share price of subsidiary Plaza Centers NV (LSE:PLAZWSE:WLZ). Elbit Imaging is struggling to comply, and is in talks with the bank. A debt settlement seems almost a certainty.
Elbit Imaging chairman Shimon Yitzhaki tried to calm the bondholders at the start of the meeting, saying, "We're making every effort to meet cash flow and find an investor. We have skill and experience in making bid deals, and we'll meet our debt payments by bringing in a new investor."
Yitzhaki and Elbit Imaging VP and general counsel Zvi Maayan then took questions from the audience. Zisser, who was due to attend upon arrival from overseas, cancelled his participation, citing illness. He is scheduled to undergo catheterization, and his aides said that he would return to work in a few days.
100 people attended the meeting, including representatives of investment institutions, lawyers, and many private investors, who did not hesitate to express their frustration about Elbit Imaging's shape. The company's resources and uses report states that it is due to make NIS 732 million in payments this year, but has just NIS 116 million in cash. It expects NIS 1 billion revenue this year, and is due to make an NIS 80 million payment on its two short-term bonds in February.
After the meeting of bondholders of all eight of the company's bonds, the bondholders of the two short-term bonds held a separate meeting. The issue on the agenda was whether to consolidate the bonds and set up a joint representative body, or to have two separate representatives.
Elbit Imaging, which has a market cap of just $42.8 million (NIS 156 million), and its bond debt totals NIS 2.5 billion. Its bonds are traded at junk bond status with yields of hundreds of percent. Last month, Standard & Poor's Maalot Ltd. and Midroog Ltd. slashed their ratings for the company's bonds five grades to speculative investment grade.
Elbit Imaging's bondholders face a second front against the bondholders of Plaza Centers, in which Elbit Imaging owns a 63% stake, and which has been asked to distribute a €30 million divided from which Elbit Imaging will benefit. Plaza Centers' shareholders will hold a general meeting in February to approve the dividend, which the bondholders oppose. Plaza Centers' bond debt totals NIS 1.3 billion, and the bonds are traded at yields of up to 22%. Elbit Imaging will use half of the dividend to repay Bank Hapoalim. "If we get the dividend from Plaza Centers, we will have no problem meeting the upcoming bond payment," said Yitzhaki.
Published by Globes [online], Israel business news - www.globes-online.com - on January 21, 2013
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