Alon Blue Square Series Gimel bondholders will convene Thursday for a meeting to receive an update from their representatives in the negotiations with Moti Ben-Moshe, who proposed a debt restructuring as part of his acquisition of the company from Alon Group.
Sources familiar with bondholders said in recent days the broad disagreements between the parties raise questions about the duration of the talks. However, meetings between the sides have been ongoing in the past few days in an attempt to bridge the gaps, which focus mainly on commitments Alon Blue Square made to subsidiary Mega now under management of court-appointed trustees.
A month ago, Series Gimel bondholders voted in factor of the agreement proposed by Moti Ben-Moshe, preferring it by a large majority to a rival offer from Gindi Holdings. Ben-Moshe offered to purchase the controlling interest (72.7%) in Alon Blue Square from Alon Group for NIS 115 million and inject up to NIS 900 million into the company to allow it to fulfill its obligations.
One of the primary reasons that led bondholders to side with him was Ben-Moshe’s promise to work on the debt restructuring even if he does not reach an agreement with the Mega trustee over its liabilities to its former parent company, Alon Blue Square.
However, sources familiar with sentiment among bondholders claim Ben-Moshe has now turned the agreement with the Mega trustee into a pre-condition and was not planning to sign the deal with them beforehand.
Given the latest development, bondholders will meet Thursday to discuss whether to continue the talks with Ben-Moshe or choose one of the other options available to them: starting negotiations with Gindi Holdings; demanding the Alon Blue Square board to work on the sale of subsidiary Blue Square Real Estate; negotiate a debt restructuring with the Alon Blue Square board; or petition the court to appoint a liquidator for Alon Blue Square for its inability to fulfill its contractual obligations.
At the meeting, bondholders will hear from representatives of Ben-Moshe and Alon Blue Square on their appraisal of the situation, after which they will hold an internal hearing on the developments. The bondholders will be asked to vote by 4 pm on a proposal to postpone by a week the starting period for the immediate payment of the company’s liabilities to them. The decision would afford the trustee the power to work towards the immediate payment of the debt after March 24, if they are convinced they cannot collect the NIS 380-million-debt in other ways.
Mega troubles
On Wednesday, Blue Square Real Estate, which owns the majority of Mega branches, reported it ended 2015 with a net profit of NIS 110 million a 43% drop from 2014.
One of the reasons for the decline was a negative adjustment of NIS 38 million in the value of the properties leased to Mega written off because of the possibility Mega may pull out of some of the branches and the lowered rents the retailer is paying Blue Square Real Estate for the use of the properties.
Another Alon Blue Square subsidiary, the retail chain Naaman Group, reported an annual loss of NIS 15 million, after posting a net profit of NIS 5 million in 2014. Naaman, which operated the Naaman retail chain and textile retailer Vardinon, said the loss was mostly due to a NIS 15 million write-off on its home products line after Mega entered its decline, as well as the uncertainty over the company’s distribution, as Mega sells the products imported by Naaman.
Published by Globes [online], Israel business news - www.globes-online.com - on March 17, 2016
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