A $100 million bond offering by Plaza Centers NV (LSE:PLAZWSE:WLZ), the East European development arm of Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT), controlled by Mordechay Zisser, has failed. The company repeatedly postponed the booking for offering several times, most recently on Friday. In a statement, Plaza Centers cited "technical problems", without elaborating.
Plaza Center's underwriter, Bank of America Merrill Lynch, tried to raise the debt overseas and also approached Israeli investment institutions. The bonds' high 12% interest rate was due to be repaid biannually, and the principal would be repaid in a single installment after five years.
In August, Midroog Ltd. downgraded Plaza Center's bond rating by one grade from A3 to Baa1, citing the company's continued lack of access to the capital market, combined with its substantial bond repayment schedule, which are liable to quickly erode the company's liquidity."
Plaza Centers is due to make a NIS 90 million bond repayment by the end of this year, and to make NIS 400 million in repayments in 2013. The company has the necessary capital, but the purpose of the debt offering was apparently to help Elbit Imaging, which owes NIS 2.5 billion, and whose bonds are traded at junk bond yields of up to 72%. Standard & Poor's Maalot Ltd. cut Elbit Imaging's debt rating to BBB, citing the company's financial risk and inadequate liquidity.
Plaza Centers said in response that it regularly reviewed ways to improve its capital and debt structure, and that it examined the possibility of raising new debt in international markets at a reasonable interest rate that was acceptable by the company. "In view of the condition in international debt markets and the restrictions we set ourselves about the terms of the offering and maximum reasonable interest rate, we decided not to move forward on the offering at this time."
Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2012
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