Amid deepening questions regarding Heftsiba Building Development & Investments Ltd.'s financial stability, and reports of hundreds of apartments being overrun by worried buyers, the real estate firm appears to be on the verge of collapse. Earlier today, Electra Ltd. (TASE: ELTR) announced that it has cancelled its acquisition of Heftsiba Building Development & Investments Ltd. and will try to recover both the NIS 30.1 million it paid for the company as well as $12.5 million in Heftsiba bonds in its possession. The company added that its maximum exposure to Heftsiba is NIS 170 million.
Pangaea Real Estate Ltd. (TASE:PNGD) also notified the TASE that it would not exercise its option to buy shares in Heftsiba Building.
Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY.PK) subsidiary Danya Cebus Ltd. (TASE: DNYA) also said that it was owed NIS 30 million by Heftsiba for past and ongoing work for the company.
Faced with debts of about NIS 1.25 billion, Heftsiba is set to turn to the courts to ask for stay of proceedings against it. Its collapse would leave suppliers and apartment buyers without much of their money. According to estimates, Heftsiba has NIS 450 million of current debts, including checks to suppliers that were dated through 2010; NIS 300 million of bonds issued to institutional investors; up to NIS 400 million in bank loans; NIS 30 million owed to Danya Cebus Ltd. (TASE: DNYA); and NIS 10 million owed to Solel Boneh.
While almost every Israeli bank has loaned money to Heftsiba, it appears that the biggest lender is Israel Discount Bank (TASE: DSCT), which is allegedly owed NIS 120 million.
The company is owned by president Mordechai Yona and his son, Boaz Yona, who serves as CEO and chairman.
During the course of the day it was not possible to receive a response from Heftsiba.
Hundreds of families invaded apartments that the company built in Modi’in Ilit, a new haredi (ultra-orthodox) town, worried about Heftsiba’s liquidity. Information obtained by “Globes” indicates that hundreds of families last night invaded the apartments that they had bought. At 6 am today, security guards, apparently hired by Heftsiba’s receiver, arrived at the building site to ensure that no construction material would be stolen.
In the Ramat Heftsiba project in Beit Shemesh, dozens of apartment buyers, acting on rumors of Heftsiba's bankruptcy, took over their apartments which are still under construction. The police did not attempt any evacuations, saying they had not received a complaint from the company.
In addition, hundreds of company employees, who have not been paid for months, were notified that the company is bankrupt.
The Modi’in Ilit project, which is also known as Matityahu East (Kiryat Sefer), comprises 450 mostly three-room apartments in buildings of 5-6 floors each. The Modi’in Ilit Local Authority is located just east of the Green Line, near the city of Modi’in. The apartments have stood empty for 18 months, and may not legally be occupied following a High Court of Justice ruling in early 2006.
The Kiryat Sefer project was initiated by the Binyan Shalem NGO, which is affiliated with the Degel Hatorah party. Heftsiba Building was the chief contractor for the project. The apartment buyers, mostly poor and lower middle class haredi families paid $100,000 each for the apartments, into which they have not been able to move.
Published by Globes [online], Israel business news - www.globes.co.il - on August 2, 2007
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