Alon Israel Oil Co. Ltd's public share offering on the Tel Aviv Stock Exchange has failed and it now looks certain that what was formerly the country's largest holding company will fall into the hands of its bondholders. The company has collapsed under the burden of its debt and in order to fulfil a large debt settlement, it had been required to raise a minimum of NIS 120 million in a share offering by the beginning of October. The offering, which had been due to take place yesterday was unsuccessful. Nevertheless, sources close to the company hope that a buyer prepared to acquire control of the company through a public offering will appear at the last moment and they are hanging on to the slim possibility that this will happen by the end of the week.
Five months after the debt settlement was reached, the company has been striving to raise NIS 126 million through an offering of NIS 1.05 per share. According to the prospectus, new shares would have formed 60% of its share capital. In addition, under the terms of the debt settlement, the company's bondholders would have received 25% of the shares after the issue. Existing shareholders Shraga Biran and the kibbutz purchasing organizations would have been left with a holding of 13.7%. The remaining 1.3% would have gone to CEO Avi Geffen and chairman Yehoshua (Shuki) Oren. The offering was to be led by Discount Underwriting, headed by Tzahi Sultan.
The debt settlement stipulates that unless Alon Israel completes an offering of at least NIS 120 million by October 1, ownership of the company will pass entirely to the bondholders.
Alon Israel has undergone many upsets in recent years because of its high leverage and erosion in the value of its assets. The group had to deal with the collapse of retail chain Mega, which led to loss of control of it and of Blue Square Real Estate.
According to the prospectus, after the debt settlement, Alon Israel's debt to its bondholders stood at NIS 1.5 billion at the end of June this year. In addition, it owed NIS 30 million to Bank Hapoalim (TASE: POLI), and NIS 103 to the Israel Tax Authority.
Published by Globes [online], Israel business news - www.globes-online.com - on September 26, 2017
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