Psagot Investment House Ltd. the largest bondholder in Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), has officially announced that it will ask the courts to appoint a liquidator for the company. Psagot intends to undertake the legal proceedings so that the company will be under court administration or run by a trustee, rather than by chairman Lev Leviev, in order to prevent any unilateral actions by him.
Psagot believes that Africa-Israel is worth more to its creditors while in liquidation or under a stay of proceedings than in its present standing. Psagot CEO Roy Vermos told "Globes", "The meaning of Africa-Israel's announcement on August 30 that it cannot meet its commitments is that it is insolvent, and that we - the bondholders - are its real owners and there is paramount importance for a procedure that will benefit the creditors."
In a letter to Africa-Israel CEO Izzy Cohen, Psagot's attorneys stated, "So long as you do not act to formulate a structure for a creditors agreement that will include, at least, a substantial capital injection by the controlling shareholder, or, alternatively, a massive dilution of the shareholders that will reflect the full financial rights of the debts, there will be no choice but to take legal action that will ensure the protection of the rights of the bondholders."
Psagot implied that Africa-Israel was trying to manipulate the bondholders by exploiting technical problems caused by the large number of bond series. "Africa-Israel has exploited, and continues to exploit the confidence credit given it and its managers to formulate an unfair proposal while relying on procedural difficulties facing the creditors. We wish to make it clear that these problems arise from the need for the creditors to coordinate measures, not from any obstacle in taking effective action. We won't countenance a flawed situation of a de facto stay of proceedings that continues for months."
Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2009
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