Sources inform ''Globes'' that Bank Hapoalim (TASE: POLI; LSE:80OA) and Bank Leumi (TASE: LUMI) have renewed their loans to Citypass Ltd., the Jerusalem light rail franchisee. The consortium was working with no funding for the past year.
A Bank Hapoalim team headed by deputy CEO and head of corporate banking Zion Keinan visited construction sites in Jerusalem to monitor progress.
Bank Hapoalim and Bank Leumi suspended their loans to Citypass in July 2007 because of problems in the project. The banks agreed to renew the loans after the company and the state signed a compromise agreement with Citypass two months ago.
Under this agreement, the state will pay Citypass NIS 150 million compensation for cancelling all future claims by the company for delays in the project. The agreement also postponed the inauguration of the light rail by 20 months to September 2010.
After the banks froze their loans, Citypass was forced to finance construction work from the shareholders' equity of its members. Citypass reportedly spent NIS 100 million on infrastructure work, mostly financed by Ashtrom Group Ltd.
Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008