Africa-Israel bondholders threaten to sue Lev Leviev

Lev Leviev  photo: Tamar Matsafi

The trustee of the company's Series 28 bonds has called a meeting to decide on a demand for immediate repayment and a lawsuit.

The trustee of Africa-Israel Investments Ltd. (TASE:AFIL) bonds has called a meeting of the holders of the company's Series 28 bonds with the aim of bringing to a vote the request of a large bondholder to present the entire series for immediate repayment and to take legal steps against the company and its management.

The dispute between Africa-Israel and the bondholders arises from the fact that last May the company made accumulated interest payments totaling NIS 7 million to holders of Series 26 and 27 bonds while not paying Series 28 bondholders. The bondholders argue that the company and its senior managers were aware at the time that it was insolvent or at least that it faced insolvency and that the payments to holders of the other bond series were unlawful preference of creditors.

The announcement by the trustee, Hermetic Trust Services, states that Africa-Israel has refused to make the relevant payment to the Series 28 bondholders and to repair the breach, as they see it.

In a previous vote, 47% of the Series 28 bondholders were in favor of presenting the debt for immediate repayment, while 53% were opposed.

Meanwhile, Africa-Israel controlling shareholder Lev Leviev is reportedly prepared to raise the amount of cash he will inject into the company substantially from the NIS 300 million he offered previously, in exchange for a write-off of NIS 1.6 billion. As far as is known, large holders of Series 26 and 27 bonds agree to this, and are trying to persuade the objectors to remove their opposition.

At the same time, the hawkish group of bondholders continues to insist that there cannot be a debt write-off of NIS 1.6 billion, even in exchange for a new issue of shares, without a cash injection higher than NIS 500 million.

It was reported yesterday that Leviev was asking the banks to defer debt payments to free up cash for a debt settlement with the bondholders.

Sources inform 'Globes" that pressure is being brought to bear on holders of the Series 26 and 27 bonds who also hold small amounts of Series 28 bonds, and are considered to have a conflict of interests that bars them from voting with the Series 28 bondholders, to vote in favor of the huge write-off, but the hawkish group is threatening to take the matter to court in such an event.

Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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Lev Leviev  photo: Tamar Matsafi
Lev Leviev photo: Tamar Matsafi
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