Ben Dov reaches debt settlement for Tao

Bondholders will take a 20% haircut, and receive a lien on part of Ban-Dov's shares in Suny, Partner's parent company.

Ilan Ben Dov has reached a debt settlement for his struggling investment house, Tao Tsuot Ltd. (TASE: TAO-M), on the company's NIS 360 million bond debt. Ben Dov will inject NIS 30 million into the investment house and the bondholders will take a 20% haircut. On Friday, Tao notified the TASE that it had achieved substantial progress in the talks with the bondholders, who cancelled the bondholders meeting scheduled for today. Tao's board of directors is due to approve the agreement signed between the company and the bondholders.

Ben Dov effectively agreed to the debt settlement reached last month, in which the bondholders, with the exception of Ben Dov, will write off NIS 310 million on the Series B and C bonds, and receive two new bond series - one convertible - totaling NIS 248 million, which will be repaid through 2019.

The bondholders will also receive NIS 30 million in cash, 15% of Tao's shares, and a lien on 16.25% of Suny Electronics Ltd. (TASE: SUNY), also controlled by Ben Dov, which indirectly controls Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR).

When the settlement is approved, Ben Dov's stake in Tao will increase from the current 70% to 80%, and he will transfer 21.5% of Suny to Tao. He will also inject NIS 20 million in cash over three years into Tao, which will use the money to make interest payments to the bondholders. He will also convert his Tao bonds, which have a nominal value of NIS 105 million, into shares, and will also convert Tao's NIS 10 million debt to him into shares.

Tao now has to wait for the response by Bank Leumi (TASE: LUMI), the company's only secured creditor, and it must agree to the debt settlement with the bondholders. In late December, the bank objected to Tao's proposed settlement, which included a 40% haircut for the bondholders, compared with the 20% in the present settlement. The bank will reportedly not oppose the settlement, as Tao has apparently embarked on a new relationship with its bondholders.

The TASE suspended trading in Tao's share until the company publishes a detailed announcement about the settlement. The share is priced at NIS 0.05, giving a market cap of NIS 15.7 million.

Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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