Jerusalem Economy Ltd. (TASE:ECJM) (JEC) today reported that it would publish a NIS 400 million bond exchange offer for all holders of its Series F bonds that will be offered the company's long-term Series J bonds.
The company has a commitment from two entities for a NIS 150 million conversion, and positive "indications" from other holders of Series F bonds for a NIS 130 million exchange. In other words, conversion of NIS 280 million of the NIS 400 million in bonds that the company plans to convert is very likely.
According to its report to the Tel Aviv Stock Exchange (TASE), the measure will make it easier for the company to repay its debt in the coming years, starting with the redemption of Series F bonds at the end of this year. The company stated, "For every NIS 100 million in par value of Series F bonds exchanged, the amount of interest and principle in the upcoming payment will be lowered by NIS 39.8 million."
In addition, the company plans to publish in the coming days a presentation with a business plan for the coming years in preparation for an offering of shares to the public. The volume and particulars of the flotation have not yet been determined.
A few hours after the plan was published, Bank Leumi (TASE: LUMI), which holds a lien on Eliezer Fishman's shares in Jerusalem Economy, announced that it was petitioning for the appointment of a receiver for Jerusalem Economy in order to begin proceedings for the sale of the shares on which it holds a lien. Bank Leumi emphasized that it did not intend to intervene in management of the company, saying "At this stage, the receivers will not have the authority to direct the activity of the companies included in the encumbered assets, vote at the companies' general shareholders meeting, or appoint directors or CEO in these companies."
Bank Leumi's court petition indicates that Fishman's debt to the bank totals NIS 2 billion, and the bank decided to have a receiver appointed after a deal with the Nakash brothers fell through, and anxiety grew about a credit rating downgrade of Jerusalem Economy.
"There is genuine concern that the process of erosion in the collateral will gain momentum in the coming days, while the process of selling the Jerusalem Economy shares will come to a halt, or will not go ahead in the required manner or at the necessary speed," Bank Leumi wrote in its court petition. "In this state of affairs, there is real importance in the prompt appointment of receivers for the shares, who will be able to take action to optimally preserve the encumbered assets even at this time of upheaval, and will act decisively and with focus to take the necessary actions for the sale of the encumbered assets and payment of the debts to the bank."
Eliezer Fishman is the controlling shareholder in "Globes".
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2015
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