Plaza Centers NV (LSE:PLAZWSE:WLZ), a subsidiary of Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT), controlled by Mordechay Zisser, today announced the sale of the Dream Island project, in which it owns a 43.5% stake, in Hungary for €15 million. Dream Island was an ambitious project on an island in the Danube in Budapest.
Plaza Centers and its partners bought the land from the Hungarian government and planned to build a casino, hotels, apartments, an opera house, a marina, and other facilities on the site.
At the time, Plaza Centers had high hopes for the project, but it has been forced to make massive write-downs on it in recent years, mainly because of the repeated postponements in the expected completion. (Plaza Centers previously forecast that the project would be completed in 2012, but the date is now 2017).
Plaza Centers reduced the valuation of the Dream Island project in its books from €71.9 million at the end of 2009 to €20.9 million at the end of 2012. The company will probably not report free cash flow from the sale, because the sale proceeds will be used to repay a proportion of the securitized bank debt financing the asset.
Elbit Imaging is in the midst of negotiating a NIS 2.5 billion bank settlement, in which the company's bondholders will write off more than half of the value of the debt owed them.
Published by Globes [online], Israel business news - www.globes-online.com - on October 31, 2013
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