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"We must pray for the gas to flow again, otherwise I see no chance of the money being repaid. I don’t believe that the International Court will force Ampal to show the money," said Gilad Altshuler, the co-CEO of Altshuler Shaham Ltd., one of the bondholders of Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL), controlled by chairman Yosef Maiman.
Altshuler spoke a day after Ampal, which owns 12.5% of Egyptian natural gas exporter to Israel, East Mediterranean Gas Company (EMG) announced that it would seek a debt settlement with the company's creditors and bondholders. For their part, creditors and bondholders are demanding that Maiman inject capital into the company.
Commenting on the institutions' demand that Maimon inject capital into Ampal, either through cash, guarantees, collateral on the company's shares in EMG, or by Maiman's private companies, Altshuler said, "If there is no chance of the gas flow resuming, I see no chance that Maiman will personally inject capital. I don’t think that he will return to the capital market down the road, so I place little hope that he'll bring money from home. If he believes in the lawsuit and chances that the gas flow will resume, then we'll be happy for him to invest personally to show willingness."
As for a lien on more EMG shares, Altshuler said, "What does it matter if you have 2% or 100% of EMG? If there's no gas it's meaningless."
Ampal's EMG holding has been a major source of trouble this year, due to repeated attacks on natural gas pipelines in Sinai, which resulted in disruptions in natural gas deliveries.
Yesterday, Ampal announced that it will convene a bondholders meeting in early January, to ask them to defer redemption of the company's bonds by two years. Ampal had $108 million in liquid assets at the end of September, including $69 million in cash - a third of its bond debt. The yield on the company's bonds subsequently doubled.
Ampal's bondholders are not the company's only creditors who should worry. In 2007, Maiman sold a block of EMG shares to Israeli institutional investors at a company value of $2.2 billion. Sources inform ''Globes'' that that the shares are now booked at $1-1.2 billion after a series of write-downs this year.
"The owners should make a large capital injection," said an investment manager at a large investment institution today. He said that the threshold conditions for entering into a debt settlement include the salary of Maiman and Ampal executives over several years. "Just to get started, they should talk about returning their bonuses and slashing their salaries," he said, adding, "The company was not properly managed even before the chaos in Egypt. It's no coincidence that the share price has plummeted in recent years."
The investment manager at an insurance company agreed, saying, "The principles are clear - Ampal should provide guarantees against a postponement, even if they are Maiman's assets in other companies. I have reasonable grounds to believe that he has such assets. The company must also streamline, including cutting the salary of its controlling shareholder or block his salary entirely. Closer supervision by the bondholders on the company's conduct is also necessary, along with a fine or participation in a future upside."
More extreme opinions have also been vented. "Ampal should be liquidated," said a small institution that holds the company's bonds. "If it wants to avoid liquidation, Maiman should make a really good offer to purchase that will include higher interest, liens on his private companies, collateral, and more."
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