Bank Hapoalim (TASE: POLI) today petitioned the Tel Aviv District Court to appoint a receiver for the controlling stake in Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT). Mordechay Zisser owns the 53% controlling interest in Elbit Imaging through Europe-Israel MMS Ltd. The petition comes after Elbit Imaging reached a non-binding summary of terms with two of its biggest bondholders: York Capital Management Global Advisors LLC and Davidson Kempner Capital Management LLC (DK).
Europe-Israel owes Bank Hapoalim NIS 1 billion, and Elbit Imaging owes it an additional NIS 300 million.
York Capital and DK Partners own 20% and 15% of Elbit Imaging's debt, respectively. Under the proposal, announced by Elbit Imaging this morning, the company's unsecured debt, which totals NIS 2.5 billion, will be converted into equity and new bonds, according to the following formula: ordinary shares, amounting to 86% of the company fully diluted share capital immediately following the conversion; and new bonds with a nominal value of NIS 300 million. The shares will be listed for trading on the TASE and Nasdaq Global Select Market.
As a consequence, Zisser will lose control of Elbit Imaging, although he will stay on as president and CEO.
The new bond will bear 8% annual interest, which will be repaid semiannually. The principal will be paid in a single payment in five years.
The new shares and bonds will be distributed among all of Elbit Imaging's bondholders proportionately to the par balance of their holding in each of the company's bond series.
Under the proposal, Elbit Imaging's secured debt to Bank Hapoalim will remain outstanding and payable in accordance with the existing repayment schedule and other terms.
Elbit Imaging said, "The parties to the summary of terms expressed their belief that the restructuring is in the best interest of the company and its creditors in order for the company to maximize and unlock the true value of its assets."
In a separate development, Tel Aviv District Court Judge Varda Alshech yesterday rejected the petition by Europe-Israel an objection to a petition for receivership."
Elbit Imaging, which engages in real estate development, mostly in Eastern Europe, the US, and India, is financially troubled. According to its sources and uses report published in January, the company is due to make NIS 732 million in payments this year, but has NIS 116 million in cash. Last week, the company did not pay the interest and principal on its short-term bonds.
Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2013
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