(Nasdaq: MNTE) has disclosed that its two external directors have resigned and that the company no longer meets Nasdaq criteria. The statements were made in its application for a stay in proceedings filed yesterday with the Tel Aviv District Court.
Mentergy stated through its attorney that the main reasons for its crisis were delayed deals for its e-learning product; a delay in a financing round by its subsidiary Gilat Satcom, that was intended to pay off its debt to Mentergy; a delay in sales of operations in the US; and the end of cash injections by its owners and bank credit, which left it unable to pay salaries.
Mentergy stated it paid only 30% of August salaries to its employees, while its co-CEO received no pay at all. The company has no means to pay September salaries, and its checks were returned. "Under the present circumstances, we cannot promise to repay debts as necessary, including employee salaries," the company admits.
Mentergy says its debts total $14.6 million, including $12.5 million to the banks. Half its debt is in convertible bonds under the arrangement reached last year. Shamrock Holdings and Discount Investment Corporation, which jointly own a third of Mentergy, owe it $350,000. The company owes its employees $650,000.
All of the company's assets are mortgaged to the banks. "A quick sale of assets by the company's receiver will not cover debts to secured creditors," the application states. "Therefore, without a creditors' arrangement, there will be no alternative except to halt the company’s operations."
Mentergy says that its creditor banks, Bank Leumi, Bank Hapoalim and The First International Bank of Israel, agreed to a three-month stay in proceedings. Mentergy claims the proposed measures will minimize the damage to its subsidiaries, which have hundreds of employees. The company asked that Adv. Doron Tischmann be appointed trustee to implement the creditors’ arrangement.
Published by Globes [online] - www.globes.co.il - on September 26, 2002