The Series B bondholders of Kardan NV (TASE: KRNV;AEX:KARD) will convene for another consultation meeting today, following the release of the company's 2017 financials. For the first time, Kardan NV, headed by Ariel Hasson, reported a deficit on shareholders' equity, of €826,000, as well as the going concern warning that has accompanied its financial statements for some time.
The shareholders' equity deficit is a result of a €42 million loss in 2017, following cumulative losses of €59 million in 2015 and 2016. The deficit apparently lends further weight to the bondholders' demand to take over ownership of the company.
In February, Kardan NV defaulted on a debt payment of NIS 472 million (€109 million) to its bondholders in two series (A and B) after failing in its attempt to sell its 98.43% holding in infrastructure company Tahal Group to the Fortissimo fund. The sale was supposed to yield $120 million (€98 million) for Kardan, but was cancelled at the last minute by the buyer. Thus Kardan NV was left with just €7.1 million cash at the beginning of 2018, so that it was unable to pay the debt.
Following the failure of the Tahal sale, Kardan entered into negotiations on a debt arrangement with its bondholders. The company offered an allocation of a third of its shares in exchange for rescheduling of the debt repayments. Some of the bondholders claim, however, that the company is insolvent, and that, unless it raises new capital, all of its shares should therefore be transferred to them, as happened in the debt arrangement in the Alon group.
In its financial report, Kardan NV says that it intends to continue negotiating with the bondholders with the aim of reaching an agreement in the near future, while continuing its efforts to sell its stake in Tahal. The company stresses that it will focus on liquidating its assets in order to pay its debts.
Kardan NV owes its bondholders NIS 1.35 billion; NIS 205 billion to the Series A holders and NIS 1.146 billion to the Series B holders. The bonds are currently traded at 53% of their par value, clearly indicating that the market considers the company insolvent, and likely to be able to repay only NIS 700 million, just over half its liabilities.
Published by Globes [online], Israel business news - www.globes-online.com - on April 10, 2018
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