Real estate co Aura seeks NIS 240m debt settlement

In a laconic notice to the TASE on Sunday evening, income-producing real estate company Aura Investments Ltd. (TASE:AURA) said, "The amount of cash available to the company for the purposes of repaying debt is substantially lower than needed." The announcement came just two months after the company said that it could meet its liabilities and a day after publishing incredible valuations for its properties.

Aura, controlled by chairman Joseph Saliah and CEO Boaz Misholi, has therefore asked its bondholders, to whom it owes NIS 240 million, for a debt settlement.

At a stormy bondholders meeting in Tel Aviv yesterday, Saliah and Misholi declined to promise to support the company. "I have no money," said Misholi, a former high-tech entrepreneur and co-founder of Check Point Software Technologies Ltd. (Nasdaq: CHKP) and Fundtech Ltd. (Nasdaq: FNDT; TASE: FNDT), reiterating his remarks at the previous meeting. He told a bondholder, "If you know better than, here, take the keys."

Aura develops shopping centers in Central and Eastern Europe, is building more than 1,500 apartments in Israel, and owns extended-stay facilities in New York City. The failure of its Eastern European projects pushed the company into financial crisis. For a long time, Saliah and Misholi tried to present matters as "business as usual". Only on Sunday, did it state, "Despite its efforts and operations, there is a risk that the company will not be able to pay the upcoming payments to bondholders in full, including payments due at the end of November."

Saliah and Misholi are asking for a three-month grace period to reach a debt settlement, during which they will try to sell properties at full price. The bondholders are divided whether to elect a representative to discuss a settlement with the controlling shareholders, or to liquidate the company.

Aura's share price fell 8.1% in early trading on the TASE today to NIS 0.40, giving a market cap of NIS 35 million, after falling 13.2% yesterday. The share price has fallen 90% since the beginning of the year, and its bond yields are at junk-bond status.

Published by Globes [online], Israel business news - www.globes-online.com - on November 1, 2011