Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI), controlled by Moti Ben-Moshe, is holding the auction for institutions in its new NIS 350 million Series E bond issue today. The bonds will be secured with a lien on part of Alon Holdings Blue Square's assets. The purpose of the bonds is to finance the acquisition of a 56% controlling interest in Africa Israel Properties (TASE: AFPR) in the framework of the debt settlement of Africa-Israel Investments Ltd. (TASE:AFIL).
In another development, Alon Holdings Blue Square subsidiary Blue Square Real Estate Ltd. (TASE:BLSR) notified the TASE that revisions in the valuation of some of its properties in its reports for the third quarter of 2018 show that the company could record a NIS 60 million net profit from an increase in the fair value of its real estate for investment. Blue Square Real Estate explained that this profit resulted mainly from reduced discounting rates for its cash flow used in assessing the value of some of the properties and from a revision of the value of rights in two properties.
Blue Square Real Estate also reported that it had reached agreement in principle in its negotiations with representatives of the Gindi family concerning the banks funding the Tel Aviv wholesale market project, which contains the TLV mall and the surrounding residential neighborhood. According to these understandings, which have not yet been finally approved, the banks will waive sanctions for breach of the financial covenant for the minimum net operating income (NOI) the mall is required to achieve. The mall will also receive a waiver for any other breach under the existing financing agreements.
The TLV mall and the surrounding neighborhood were jointly constructed by Blue Square Real Estate (50%), Moshe and Yigal Gindi (205%), and the investment company of Moshe Gindi's children (25%). The mall, first opened over 18 months ago, was funded with a NIS 1.1 billion loan from Bank Hapoalim (TASE: POLI) and Mizrahi Tefahot Bank (TASE:MZTF) repayable in November 2019.
Together with the waiver of the financial covenant, the mall owners and the banks today agreed to revise the financing agreement for the mall. Under these agreements, the mall company and the residential company will undertake to make early repayment of NIS 200 million of the loan from the surpluses and assets of the residential company with no penalty for early repayment. NIS 90 million of this sum will be paid immediately, while the rest will be repaid in a number of payments by the end of June 2019.
The parties also agreed that the date for full repayment of the loan would be postponed until three years from the date on which the revision of the agreement is completed, but no later than December 31, 2021. Interest payments and 9% of the loan principal will be paid to the banks over the period of the loan, and Blue Square Real Estate and the Gindi family will also increase their collateral for the loan from NIS 200 million to NIS 300 million.
The period of the mall company's undertaking to meet the minimum NOI will also be extended to the deadline for full repayment of the loan, and will first be examined at the end of June 2019. This criterion will be gradually increased from a minimum of NIS 30 million to a minimum of NIS 80 million.
Published by Globes, Israel business news - en.globes.co.il - on November 8, 2018
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