Arazim Investment Ltd. (TASE: AZRM), already trying to reach a settlement with its Israeli bondholders, has been dealt a severe blow by The Royal Bank of Scotland plc (LSE: RBS), which is demanding partial early repayment of NIS 250 million in loans.
RBS notified Arazim that its subsidiary Lloyds is not in compliance with the financial covenants and that the bank was demanding that the company inject ₤39 million in capital for the partial repayment of loans by August 27.
RBS loaned Arazim the money to acquire its most important and successful asset in the UK: a chain of 64 assisted living facilities with 2,864 beds. Arazim owns the properties through Lloyds. The properties are worth ₤147 million, while the outstanding loan amounts to ₤161 million. Arazim bought the chain in 2005 for ₤218 million in a lease-back deal from Southern Cross Healthcare Group plc (LSE: SCHE, financed with two loans. RBS heads the syndicate that provided the ₤197 million loan for the acquisition.
Arazim leases the assisted living facilities to various operators: Southern Cross operates 53 of the facilities, and the others are operated by Four Seasons Health Care and small firms.
Arazim said in its notice to the TASE, "The company and Lloyds are reviewing the significance and ramifications of the notice."
Arazim chairman and CEO Meir Gurvitz owns 63% of the company. The share fell 5.6% in early trading to NIS 5.85.
Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2009
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