Arison Group Ltd., the private company of Shari Arison, has raised NIS 2.5 billion in a private placement. The company owns the 20.3% controlling core in Bank Hapoalim (TASE: POLI), a stake worth NIS 4.4 billion.
Arison Group will use the proceeds to reduce its leverage and extend the duration of its current bonds, after Bank Hapoalim stopped distributing dividends, which used to be the company's main source of revenue to repay its debt.
The process of recycling Arison Group's huge debt took several months. The company owes financial institutions NIS 1.5 billion in bonds issued in 2007 and NIS 800 million to Israeli banks. In exchange for extending the bonds' duration, the bondholders who accepted the offer of the new bonds received a higher interest rate and a negative lien on Bank Hapoalim shares. Arison Group also promised to maintain a capital-to-balance sheet rate of over 40%.
Arison Group's current Consumer Price Index (CPI) linked bond bears an annual interest rate of 4.9% and is due to mature in 2014-18. The new CPI-linked bond bears an annual interest rate of 5.2% and will be repaid in 2013-22. Eight financial institutions and three banks provided the new financing as private loans, rather than as a new bond. Private loans are becoming increasingly popular, surpassing non-bank credit.
Arison Group operates through two arms: Arison Holdings, which controls Bank Hapoalim; and Arison Investments, which controls Shikun & Binui Holdings Ltd. (TASE: SKBN), MIYA, and Israel Salt Industries Ltd., which owns 6% of Bank Hapoalim.
Published by Globes [online], Israel business news - www.globes-online.com - on February 20, 2013
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