Africa-Israel Investments Ltd. (TASE:AFIL) bondholders have selected the joint bid by Lapidoth Capital, controlled by Jacob Luxenburg, and Altshuler Shaham Provident Funds and Pension, for acquiring ownership of Africa Israel as part of a debt settlement for the company. In a vote last Thursday, the joint bid won a majority of the votes at the bondholders' meeting. Following these clear results, the bond trustees and representatives of the bondholders will meet to negotiate a detailed debt settlement with Lapidoth Capital. The settlement will then be brought to the court for approval.
In its current limited form, Africa Israel has two main assets: full ownership of construction and infrastructure company Danya Cebus and a 74% controlling interest in residential construction developer Africa Israel Residences. In addition to these two assets, Africa Israel also owns land in Savyon and has NIS 546 million in cash, including payments it stands to receive from the sale of its holdings in the operator of Road 6.
There were four bidders for Africa Israel: the Mivtach Shamir holding company, YH Dimri Construction & Development, businessperson Gad Zeevi, and holding company Lapidoth Capital, which made a joint bid with Altshuler Shaham, a leading investment institution.
The four bids that were voted on were based on the acquisition of full ownership of Africa Israel through an overall debt arrangement under court auspices. This means that the shares currently held by the previous owners, Lev Leviev and the public, will be nullified.
Africa-Israel owes NIS 2.25 billion to holders of its Series 26, Series 27, and Series 28 bonds, who are likely to have nearly half of the debt written off. In return for acquiring full ownership, the four bidders offered the bondholders packages including cash payments, the cash in the company treasury, and an issue of various securities.
Lapidoth Capital's bid was perceived as safer
According to accountant Isaac Idan from the Baker Tilly accounting firm, the winning bid contains a NIS 879 million cash payment (including Africa Israel's cash) on the data of the settlement, and additional payments totaling NIS 365 million in marketable securities.
These securities are of two types, both of them good quality: shares in Africa Israel Residences worth NIS 203 million and bonds of Lapidoth Capital itself worth NIS 163 million. Lapidoth Capital is a holding company with NIS 390 million shareholders' equity and a NIS 600 million market cap. The company has no debt, and its balance sheet listed NIS 56 million in cash as of the end of June.
The proceeds offered by Lapidoth Capital and Altshuler Shaham total NIS 1.244 billion. Lapidoth Capital's ability to continue raising its bid in recent days was largely due to the partnership agreement it signed early this week with Altshuler Shaham, which recently held an IPO, and is has a NIS 1.64 billion market cap.
Under the agreement, Lapidoth Capital will pay 80% of the proceeds package and will be entitled to 80% of the shares in Africa Israel. Altshuler Shaham will pay 20% of the proceeds and receive 20% of the shares in Africa Israel, but its share of the cash payment will be greater, because Lapidoth Capital will pay part of its share of the proceeds by issuing bonds to the Africa Israel bondholders.
Published by Globes, Israel business news - en.globes.co.il - on September 8, 2019
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