Real estate group Jerusalem Economy Ltd. (TASE:ECJM) (JEC), controlled by Eliezer Fishman, continues to believe in its ability to service its debts over the next two years. Jerusalem Economy released its third quarter financial statements yesterday. It posted a NIS 54 million loss for the quarter, making it a NIS 285 million loss for the first nine months of 2015. This follows a NIS 304 million loss for 2014.
The heavy losses arose from Jerusalem Economy's activity in Russia, Ukraine and Belarus, which in the past two years has suffered from the economic crises in Russia and Ukraine and the steep depreciation of the local currencies against the US dollar.
Because of the crisis, Jerusalem Economy's Russia arm Mirland Development Corporation plc (AIM:MLD; TASE: MRLD.B1) was forced to negotiate a debt arrangement with its bondholders, in which debt repayments of about NIS 1 billion will be deferred in exchange for additional interest and an issue of warrants to the bondholders.
Jerusalem Economy points out that discounting the activity in Russia and neighboring countries, it made a net profit of NIS 24 million in the third quarter, and a net profit NIS 102 million in the first nine months of 2015.
Jerusalem Economy and the companies it controls hold 3.4 million square meters of income producing assets, of which 1.9 billion square meters are in Israel and the remainder in France, Canada, Germany, Russia, Ukraine and Belarus. Because of the losses in Russia and Ukraine, since September 2014 Jerusalem Economy has lost about 30% of its shareholders' equity, which at the end of September 2015 stood at NIS 1.85 billion.
In order to strengthen its balance sheet, Jerusalem Economy recently completed a NIS 202 million private placement of shares and warrants, and instituted a swap of NIS 214 million (nominal value) of bonds of its short-term F series for an allocation of NIS 258 million (nominal value) of its longer J series bonds, reducing its short-term debt repayments by NIS 100 million.
At the end of September, Jerusalem Economy had net liabilities of NIS 2.4 billion (excluding subsidiaries). In order to service this debt in the next two years, CEO David Zvida presents a plan in the financial report that includes extensive asset sales (mainly overseas), supposed to yield net cash flow of NIS 420 million. Yesterday, for example, the company reported that it was negotiating the sale of its Woobine Mall in Toronto for NIS 313 million.
Eliezer Fishman is the controlling shareholder in "Globes".
Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015