Moti Ben-Moshe and Lev Leviev are increasing their pressure in an attempt to obtain full ownership of Africa-Israel Investments Ltd. (TASE:AFIL) in the framework of a general debt arrangement for the company. The two yesterday sent a letter to the independent committee appointed by the company board of directors to negotiate a debt arrangement and to the representatives of the Africa-Israel bondholders demanding that negotiations be conducted with them for a debt arrangement for the company. According to Ben-Moshe and Leviev, they are the only ones to make a binding bid for to acquire ownership of Africa-Israel in the context of a debt arrangement, and the representatives and the committee should therefore begin negotiations with them. Ben-Moshe and Leviev further argued in their letter that the bondholders' effort to find new investors for Africa-Israel had continued for a year already, and that this lengthy period was harming the company.
Leviev, the current Africa-Israel controlling shareholder, owns 48% of the company's shares. Last May, however, the company asked the bondholders to negotiate a debt arrangement, because it was unable to pay its debts. In the first stage, the bondholders agreed that Africa-Israel would sell Leviev its 65% stake in Africa-Israel subsidiary AFI Development plc (LSE:AFID), with the NIS 550 million proceeds to be used to repay some of the debt to the bondholders.
Since then, the bondholders' representatives have striven to find investors to purchase full ownership of Africa-Israel through a debt arrangement. The representatives appointed investment banker Nir Epstein to lead the measure, which included the publication of a solicitation for bids and the opening of an information room for investors regarded as very serious. All the bids made, however, included a demand for writing off 30-50% of the NIS 2.89 billion debt. The bondholders are absolutely refusing to consent to such a write-off. Sources familiar associated with the bondholders' representatives say that the current value of Africa-Israel's assets is NIS 2.3-2.4 billion, and that there is therefore no reason to agree to write off more than 20% of the debt.
Of those who expressed interest, only Ben-Moshe and Leviev so far have made an official binding bid. This bid was recently improved, and now includes an NIS 800 million capital injection into Africa-Israel (including NIS 300 million in the initial stage) for the purpose of making payments to the bondholders and converting the rest of the debt into NIS 1.3-1.4 billion in new bonds repayable over four years and bearing 5% interest. This ostensibly amounts to a 24-27% write-off of the existing debt. Last week, however, competition for Ben-Moshe and Leviev appeared from real estate company Gindi Holdings, which offered to buy one of the Africa-Israel group's main assets - 74% of the shares in sub-subsidiary Africa-Israel Residences Ltd. (TASE:AFRE) - for NIS 830 million. Following this offer, negotiations began between the bondholders' representatives and representatives of Gindi Holdings, a development that probably inspired yesterday's letter from Ben-Moshe and Leviev.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 15, 2017
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