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Bethel Finance news:
Although the debt settlements proposed by Yitzhak Tshuva for Delek Real Estate Ltd. (TASE: DLKR) and by Ilan Ben-Dov for Tao Tsuot Ltd. (TASE: TAO-M) have grabbed the media attention, given that they total NIS 2.1 billion and NIS 500 million, respectively, smaller debt settlements proposed by several other companies add up to NIS 1.8 billion - most of which the bondholders will never see. These debt settlements are now in the courts.
Real estate companies Lagna Holdings Ltd. (TASE;LGNA), Olimpia Real Estate Holdings Ltd. (TASE: OLMP), Dorea Investment and Developments Ltd. (TASE:DORA) and Aura Investments Ltd. (TASE:AURA), as well as Metis Capital Ltd. (TASE: MTSC; DAX: EIC), andInspire Investment Ltd. (TASE:INSP) have much in common. Beyond the bad investments by the companies' bondholders, all the companies' controlling shareholders have disappeared during the debt settlement negotiations and the settlements are now in the hands of the courts.
Lagna, once controlled by Jacob Engel, controls three public companies - Engel East Europe NV (AIM:EEE), Engel Resources and Development Ltd. (TASE:ENRS), Engel Construction and Development Ltd., which operated in the Eastern European real estate market. The companies' aggregate bond debt is NIS 815 million, with almost no chance of ever being repaid.
Azorim Investment, Development and Construction Ltd. (TASE: AZRM) acquired Lagna for NIS 600 million at the height of the real estate boom, but the bust left it with NIS 2 billion in liabilities. Azorim, when it was still controlled by Shaya Boymelgreen, and itself financially troubled, sold Lagna to its bondholders. Earlier this month, Tel Aviv District Court Judge Varda Alshech approved transfer of Lagna's controlling interest to Britain's Morris family, the founders of Sodastream International Ltd. (Nasdaq: SODA).
Olimpia, founded by Oskar Katznelson also crashed because of the real estate bust in Eastern Europe, specifically in its case in Poland and Ukraine. At its peak, its market cap was NIS 560 million, and it posted large profits based on property valuations. The company lost over NIS 100 million in the past two years, and its bond yields skyrocketed. Last month, the bondholders rejected a debt settlement proposal prepared by Prof. Amir Barnea - the same who prepared Tshuva's proposal for Delek Real Estate. The bondholders have appointed Adv. Ron Bar-Nir as the company's liquidator and the companies unsecured creditors are now fighting a lost battle with the banks and secured creditors.
Aura, controlled by former chairman Joseph Saliah and former CEO Boaz Misholi crashed on failed real estate developments in Romania. Earlier this week, the Tel Aviv District Court appointed trustees during the company's stay in proceedings until February 13, 2012. The company also building residential projects in Israel and owns 35% of a Manhattan property.
Dorea, controlled by former banker Betzalel Eiger, owns income-producing properties in Israel and Europe, as well as 78% of Liberty Properties Ltd. (TASE: LBRT) and 42% of Ortam Sahar Ltd. (TASE:ORTM). Psagot Investment House Ltd. and Beresheet debt recycling fund have liens on these two holdings as collateral for NIS 160 million in loans. Negotiations with unsecured creditors on a debt settlement failed because of the liens and the court appointed special trustees for the company who will try to find a new investor to take it over, while giving bondholders a brutal haircut.
Metis Capital, controlled by Mony Harel crashed on bad investments in the car import and gas stations businesses. Its main asset is Petro Group Ltd. (TASE:PTGR), which owns gas stations in the US. It owns bondholders NIS 80 million, after a NIS 50 million buyback. Earlier this week, the courts rejected Metis's request for a stay in proceedings, even though Arko Holdings Ltd. (TASE: ARKO) has invested in Petro Group, and Metis may be heading for liquidation.
Inspire Investments, controlled by Avi Werhiem and its subsidiary Rabintex Industries Ltd. (TASE: RABN), a manufacturer of infantry flack jackets and armor kits, together owe bondholders NIS 155 million. The bonds' yields began to soar even before the companies announced in mid-2011 that they faced financial difficulties. When Wertheim refused to inject capital into the companies, their creditors turned to the courts, which are proposing a haircut.
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