Africa-Israel bondholders cancel Saidoff exclusivity

Nati Saidoff Photo: PR
Nati Saidoff Photo: PR

The bondholders are demanding that the Saidoff brothers restore what they say is the original version of their bid.

A meeting of the Africa-Israel Investments Ltd. (TASE:AFIL) bondholders yesterday decided to order the trustee to cancel the exclusivity of negotiations with the Saidoff group, the sole candidate to acquire ownership of Africa-Israel in the framework of a bond arrangement, unless the group returns to the negotiating table with the original version of its bid.

The bondholders had to decide whether or not to terminate the exclusive negotiations with the Saidoff group and to instruct the trustee to foreclose a NIS 2 million deposit made by the group. As a condition for maintaining exclusivity in the negotiations, they were demanding a written notice from the Saidoff group stating that the arrangement with the bondholders was not contingent on consent from other parties or other matters.

Disputed matters

The disputes between the bondholders and the Saidoff group concern several matters. The main bone of contention is possible lawsuits for debt that third parties might file against Africa-Israel when the debt settlement is presented to the court for approval, particularly the Israel Tax Authority.

While the bondholders are only interested in the debt to them, the Saidoff group is demanding that the company should be entirely clear of debt before the debt settlement is completed and that they should not bear any costs associated with the settlement.

The second matter in dispute is land in Russia the rights in which are mortgaged to the bondholders and that in the original offer represented part of the consideration to them.

According to the Saidoffs, this land is not owned by Africa-Israel, but by its publicly traded subsidiary, AFI Industries, which is also in severe difficulties. Africa-Israel Investment only has a mortgage on the land that it received as security for loans, and so the bondholders can only receive the rights awarded by the loan agreement in the initial stage.

Still another dispute concerns other proceeds promised to the bondholders - 2% of the shares in Africa-Israel Residences Ltd. (TASE:AFRE), with a value of NIS 17 million, held by Danya Cebus, a fully-owned subsidiary of Africa-Israel. According to the Saidoff group, all of the shares in Africa-Israel Residences owned by Danya Cebus (a 74% stake) are currently attached in favor of Israel Discount Bank (TASE: DSCT), and transferring the shares to the bondholders therefore requires the bank's approval.

The original bid

Africa-Israel owes NIS 2.8 billion to its bondholders, and is in a state of insolvency. The bondholders last month voted to grant the Saidoff group 30 days of exclusivity in negotiations with its representatives and the trustees on the base of the group's initial bid to acquire Africa-Israel in the framework of the bond arrangement. This decision stated that the trustees could extend the exclusivity period by two additional periods of 14 days each.

The Saidoff group's (brothers Naty and Ofer Saidoff) original bid states that on the date on which the arrangement is completed, it will acquire Africa-Israel through a private allocation of 100% of its shares, while the existing Africa-Israel shares will be canceled in the framework of the creditors arrangement, to be approved by the court.

The bid also states that as part of the arrangement, the bondholders will concede all the bonds they hold, and will receive in exchange NIS 505 million in cash, NIS 1.6 billion in new Africa-Israel bonds (bearing 4% interest, with a 4.9-year duration), and other assets with an estimated value of NIS 125 million.

Published by Globes [online], Israel Business News - www.globes-online.com - on August 15, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Nati Saidoff Photo: PR
Nati Saidoff Photo: PR
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