Africa-Israel Investments Ltd. (TASE:AFIL) today reported that it had completed the sale of a 65% controlling interest in AFI Development plc (LSE:AFID) to Lev Leviev, Africa-Israel's controlling shareholder. The full proceeds have been transferred to a trustee account in the name of the trustees for the holders of Series 26-28 bonds, and will be used for early repayment of the bonds. As part of the deal, Leviev granted Africa-Israel options to purchase up to 10% of his shares in AFI Development, and Africa-Israel assigned its rights from the options to the trustees for the bonds.
AFI Development was Africa-Israel's real estate arm in Russia, and since its founding was regarded as the apple of Leviev's eye. Following its sale of AFI Development, Africa-Israel will post a NIS 2.4 billion capital loss, and its equity will shrink by NIS 1.3 billion to NIS 180 million. The company's debts to its bondholders, which currently total NIS 3.32 billion, will be reduced to NIS 2.77 billion by the early repayment. The company must still, however, complete a debt arrangement with the bondholders that will include the conversion of NIS 1 billion of the debt into Africa-Israel shares.
Africa-Israel's bonds responded today to the news with a jump of up to 2%, and its Series 26 and 28 bonds are traded at 65% of their par value, while its Series 28 bonds are traded at 71% of their par value. The Series 28 bonds, for which most of the holding in AFI Development was attached, have surged 61% over the past three months, following the unexpected agreement for the sale to Leviev at double the market price preceding the announcement.
Published by Globes [online], Israel business news - www.globes-online.com - on September 8, 2016
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