Dankner, Tshuva face recall of Plaza casino loan

Yitzhak Tshuva's Elad and Nochi Dankner's IDB Development have failed to pay the $620 million loan for the Las Vegas project.

The bank syndicate that lent Nochi Dankner and Yitzhak Tshuva the money to buy the land for the Plaza casino and hotel in Las Vegas are about to recall the loan. Last Thursday, they set them a warning letter over the non-payment of the $620 million loan on time.

Tomorrow, the parties will meet in New York, where the lenders will announce whether they agree to the debt settlement proposed by Tshuva's Elad Properties and Dankner's IDB Development Corporation (including through its subsidiary Property and Building Ltd. (TASE: PTBL)), which own the project company in equal shares.

In a notice to the TASE, IDB Development and Property and Building said that banks notified them that the forbearance period before taking remedies for non-payment of the loan had expired, and that the companies were in breach of the financial covenants, due to the non-payment of the balance of the loan, and that they were reserving all their rights with regard to the loan.

Nonetheless, the banks and the companies are continuing negotiations to reach a settlement on the loan, either by rescheduling payment or reducing the amount to be repaid. Dankner and Tshuva are offering the syndicate a 50-82% discount on the loan, or rescheduling payments over ten years.

The companies took the $1.24 billion loan to buy the land, then occupied by the New Frontier Hotel, for the Plaza project on the Las Vegas Strip in 2007. But the real estate crisis the following year, put paid to their plans for the Plaza casino, and the debt repayment has been repeatedly postponed. The companies have written off almost the entire $500 million invested in the project.

The bank syndicate includes Bank Hapoalim (TASE: POLI), Mizrahi Tefahot Bank (TASE:MZTF), and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), which lent $100 million. They have already written off most of the loan.

The debt settlement proposed by Plaza casino project company requires it to put up $80-90 million, with the balance of the amount coming from a new loan. IDB Development's bondholders oppose the proposal.

Published by Globes [online], Israel business news - www.globes-online.com - on October 14, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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