Israeli businessman Gad Zeevi is bidding against Meir Shamir for control of the current scaled back version of Africa Israel. A trust controlled by Zeevi and his immediate family yesterday filed a document of principles for a debt arrangement with Africa Israel and holders of its Series 26 and Series 28 bonds, under court auspices.
The document indicates that it was given in pursuance of meetings with the trustee for the bonds and representatives of Africa Israel's bondholders. Zeevi's lawyers, Adv. Amir Bartov and Adv. Ayana Wechsler of the Shimonov & Co. law firm, assert that this bid "is significantly better than the arrangement proposed by Mivtach Shamir," controlled by Meir Shamir.
Under Zeevi's bid, on the date on which the arrangement is implemented, Zeevi will be allocated 100% of Africa Israel's issued share capital, while the shares currently held by Lev Leviev and public will be canceled (invalidated, in legal language). As part of the settlement, Zeevi is offering Africa Israel's bondholders a package of considerations, including NIS 280 million in cash, plus all of Africa-Israel's cash, minus NIS 10 million to be left in the company treasury and NIS 70 million for income tax payments and tens of millions of shekels for the trustees, representatives of the bondholders, and various consultants who have been handling the arrangement for over three years.
Zeevi is also offering an amount in cash equal to their relative share of the estimated NIS 13 million in cash currently in the treasury of Savion Nurseries, plus the issuing of a new long-term NIS 270 million bond series secured with a lien on the shares in Africa Israel Residences held by Danya Cebus. Zeevi will have the right to increase the cash payment to the bondholders by NIS 40 million to NIS 320 million in exchange for reducing the bond series by NIS 40 million to NIS 230 million.
Zeevi is offering the bondholders 25% of Danya Cebus's cumulative net profit over six years, starting from the end of the third year after the arrangement is implemented through the end of the ninth year. This payment will be a minimum of NIS 80 million and a maximum of NIS 100 million. The bondholders will also be entitled to 70% of the net proceeds received by the company from the sale of Africa Israel's rights in land in Savion, with a minimum of NIS 70 million and a maximum of NIS 100 million.
Three years of insolvency
The Africa Israel real estate group has been in a state of insolvency for three years. Since then, it has sold its activities in Russia and Eastern Europe and its activities in Israel in income-producing properties, hotels, and toll roads. Following the sale, Africa Israel was left with the construction and infrastructure activity of its subsidiary, Danya Cebus, residential housing development activity of its sub-subsidiary Africa Israel Residences, and land in the Savion area.
Last week, Mivtach Shamir submitted a bid to acquire full ownership of Africa Israel, also via a debt arrangement. The basket of proceeds offered by Mivtach Shamir was assessed by parties close to the arrangement at NIS 1.1-1.3 billion, equivalent to writing off NIS 1 billion of Africa Israel's remaining NIS 2.2 billion debt.
The offer by Mivtach Shamir will be discussed at an upcoming meeting of the bondholders in Ramat Gan, after a vote on whether to accept it is planned. Given the new bid submitted by Zeevi yesterday, however, this bid is also likely to be discussed at the meeting, and may also be brought to a vote.
Published by Globes, Israel business news - en.globes.co.il - on August 5, 2019
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