Tel Aviv District Court Judge Varda Alshech today decided not to decide on the debt settlement at Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT), controlled by Mordechay Zisser. "I cannot approve the creditors settlement in this format…" she wrote. "I can only hope that the parties will continue discussions in a way that will permit a correction, which will satisfy some of the opponents, subject to keeping the principle of equality between the creditors completely intact."
The NIS 2.5 billion Elbit Imaging debt settlement is one of the largest settlements ever in the Israeli capital market.
Judge Alshech's decision today came three weeks after Elbit Imaging's bondholders voted on the preferred settlement. Following the votes, disputes arose over how the votes were counted, with each interpretation giving a different result.
Last week, the Receiver General filed his position on the matter with Judge Alshech, stating that he accepted Elbit Imaging's position that the debt settlement proposal passed with an 82% majority. This proposal, which is supported by foreign equity funds York Capital Management Global Advisors LLC and Davidson Kempner Capital Management LLC (DK), which together own 35% of the company's bonds, includes a write-off of almost NIS 2 billion on the debt, and converting it into 95% equity. Elbit Imaging executives, beginning with Zisser, will be issued options exercisable for up to 20% of company shares. Company officers, but not Zisser, will be immune to any future claims.
This proposal is countered by a proposal by Elbit Imaging's limited bondholders representative, under which NIS 730 million in debt will be converted into equity, a new NIS 300 million bond will be issued, bondholders will receive 95% of the company's shares, and the company's controlling shareholder and officers will not be immune to claims.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2013
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