Last minute difficulties have arisen between the representatives of Africa-Israel Investments Ltd. (TASE:AFIL) bondholders and brothers Naty and Ofer Saidoff of the US over the debt settlement in the company under which the Saidoff brothers are meant to acquire control. Just a few days before the end of the exclusive negotiation period between the two sides, the trustees of three bond series (26-28) of Africa-Israel have announced a special bondholders meeting because of what they describe as "a material change" in the Saidoff brothers' offer.
The meeting will convene on Wednesday in Tel Aviv. Its purpose is to update the bondholders, and consultation between the bond trustees and lawyers of the bondholders' representatives on the legal remedies available to protect the bondholders' rights. The letters exchanged between the parties in the past two weeks indicate deep disagreements over the interpretation of the original offer by the Saidoff group that the bondholders accepted.
Following the meeting a vote will apparently be held in which the bondholders will be asked to choose between continuing the negotiations and abandoning them in favor of one of the alternative courses of action that were on the agenda until recently, namely the bid by Moti Ben-Moshe and Lev Leviev, and the liquidation proposal put forward by some of the large bondholders.
According to sources close to the negotiations, the talks between the sides have been taking place at a sluggish pace in the past two weeks, despite the short time allowed for them by the bondholders meeting. Other sources claim that the trustees and bondholder representatives had chosen to present the changes as material in order to foreclose on the $2 million deposited with them by the Saidoff group as a pledge of seriousness.
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.
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2017
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