Leviev, Ben-Moshe bid for Africa-Israel

Lev Leviev, the controlling shareholder in Africa-Israel Investments Ltd. (TASE:AFIL) (48%), is offering to buy the company outright together with Moti Ben-Moshe, who controls the Alon group. The offer the two have submitted to Africa Israel's bondholders is without a due diligence examination, and it must be presumed to be an initial offer only and one that will involve long negotiations.

Africa Israel owes its bondholders NIS 2.8 billion. In order for the offer from Leviev and Ben-Moshe (or anyone else) to be attractive to a bondholder, it will have to include an injection of between NIS 500 million and NIS 1 billion for immediate repayment of debts. Offers are also expected to include a debt write-down of between NIS 700 million and NIS 1.3 billion, with the possibility of bondholders receiving shares in exchange.

Meanwhile, real estate developer Hagag Group Real Estate Development Ltd. (TASE: HGG), controlled by brothers Isaac and Ido Hagag, submitted a non-binding offer yesterday to buy Africa-Israel. The offer was submitted to the bondholders who in effect control Africa-Israel, which is in talks on a debt settlement.

Hagag Group is offering NIS 800 million cash and shares and bonds worth NIS 750 million to be issued specially for Africa-Israel's bondholders to replace NIS 750 million (nominal value) of bonds they currently hold, with the rest of Africa-Israel's bonds being written off.

This is only an initial, non-binding offer, subject to due diligence to Hagag Group's satisfaction, and to the signing of a memorandum of understanding and a binding agreement with the bondholders.

In the first nine months of 2016, Africa-Israel lost NIS 2.6 billion.

Last year, Leviev bought from Africa-Israel the controlling stake in subsidiary AFI Development, which deals in real estate in Russia, for NIS 550 million. Buying Africa-Israel itself would cost Leviev an injection of hundreds of millions of shekels into the company, and it is not at all clear whether he is capable of doing that. Leviev currently owns 48% of Africa-Israel through Memorand Management Ltd., which he holds privately, and which reportedly owes NIS 1.1 billion to banks in Israel, secured by Leviev's personal guarantee.

Africa-Israel's share price is currently up 19% on the Tel Aviv Stock Exchange.

Published by Globes [online], Israel business news - www.globes-online.com - on January 17, 2017

Leviev, Ben-Moshe bid for Africa-Israel

The bid comes on top of a non-binding offer from Hagag Group.