Moti Ben-Moshe is seeking to strengthen the shareholders' equity of Alon Blue Square, which he owns, with the aim of assisting it in the acquisition of Africa-Israel Properties Ltd., in the context of the debt settlement in Africa-Israel Investments Ltd. (TASE:AFIL). Alon Blue Square notified the Tel Aviv Stock Exchange yesterday of its intention to raise NIS 250-300 million in a private placement or a public offering (Alon Blue Square is currently a reporting bond issuer).
The company also reported that it was in talks with several private entities, and sources inform "Globes" that these talks are ongoing. The company stressed, however, that the date, size and terms of the issue had not yet been determined and that there was no certainty that it would take place at all.
Alon Blue Square is a privately-held holding company wholly owned by Ben-Moshe. It nevertheless reports to the stock exchange because it issued two series of bonds, currently valued at NIS 1.2 billion.
Market sources say that the offering in question is designed to reduce Alon Blue Square's leverage to below 50% by the end of 2019, on the assumption that it completes the purchase of the controlling interest in Africa Israel Properties. If this happens, then rating agency Midroog could upgrade its rating for Alon Blue Square's debt a notch to A3 from its current rating of Baa1. Up to now, investors have seen only a warning published by Midroog in November that debt offerings planned by Alon Blue Square to finance the acquisition were liable to result in a rating downgrade.
Under Africa-Israel's second debt settlement, Alon Blue Square is supposed to buy its controlling stake (55.9%) in Africa-Israel Properties for NIS 1.29 billion cash, to be transferred to Africa-Israel's bondholders. This represents the majority of the cash that the bondholders will receive in the settlement, out of a total of NIS 2.3 billion they are due to receive in cash and securities.
The process of completing the debt settlement ran aground in the past few weeks, however, and the trustees of Africa-Israel's bonds filed a demand in the court to foreclose on a deposit of NIS 100 million deposited by companies from Ben-Moshe's group to guarantee the settlement. Last Wednesday, a hearing took place in the Tel Aviv District Court, at the end of which it was ruled that the sides should return to mediation for two weeks, during which they should try to agree on a way of completing the settlement.
Ben-Moshe claimed in court that he still wanted to do the deal, but that "a campaign of incitement and smears" conducted against him by the trustees "the like of which has never been seen" according to Ben-Moshe, had cost his companies a further NIS 100-150 million. "In response to the court's question whether it will be difficult to raise the money, I answer that there are several moves that need to be carried out," Ben-Moshe said at the hearing.
Published by Globes, Israel business news - en.globes.co.il - on February 4, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019