Businessman Moti Ben-Moshe is still trying to woo Africa-Israel Investments Ltd.'s (TASE:AFIL) bondholders. As of now, however, his offers to buy the company are falling on deaf ears. Representatives of the Africa-Israel bondholders were invited last Thursday to Ben-Moshe's offices, where he presented them with his revised bid to acquire ownership of the company.
The representatives, however, believe that Ben-Moshe's bid is NIS 200 million less than the value of the properties owned by Africa-Israel, and do not intend to accept it. The parties are likely to meet again in the coming days in an attempt to bridge the gap between them.
Ben-Moshe's bid appears to be the sole concrete bid still on the table for the sale of Africa Israel as a single unit. Failing another revision in it, the representatives are likely to recommend to the bondholders an active takeover of the properties, with each property being sold individually to the highest bidder. Those favoring this idea will have to convince the other representatives to accept it.
Africa-Israel owes the holders of its three bond series NIS 2.89 billion, while the value of its properties is hundreds of millions of shekels short of this amount. In the preliminary stage of the debt settlement, Africa-Israel sold its 65% controlling interest in subsidiary AFI Development plc (LSE:AFID) to Africa-Israel controlling shareholder Lev Leviev. AFI Development handled its parent company's business in Russia. The NIS 550 million proceeds from this sale were used to repay some of the debt to the bondholders.
The rest of Africa-Israel's business, however, most of which is in Israel, is now of less interest to Leviev. For this reason, he has chosen in recent months to make joint bids with Ben-Moshe. During the most recent meeting, the bondholders realized that Ben-Moshe and Leviev's bid gave Ben-Moshe control of Africa-Israel, with Leviev set to become a minority shareholder.
Like the other bids submitted to the bondholders, the Ben-Moshe-Leviev bid also gives them ownership of all of Africa-Israel's shares in exchange for an injection of capital and writing off some of the debt to the bondholders. According to the revised bid, the value is NIS 2 billion, reflecting a 30% write-off of the current debt on the date of the debt arrangement.
Beyond that, however, Ben-Moshe is also proposing that most of the debt not being written off be converted into new debt, leaving the bondholders with most of the risk. He himself is offering to inject only NIS 300 million into Africa-Israel in the initial stage (on the completion date for the debt settlement), to be used to repay 10% of the debt.
As of now, it appears that the bondholders' representatives are unenthusiastic about Ben-Moshe's bid, and believe that more can be obtained for the bondholders by selling the company's properties individually.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 8, 2017
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