Boymelgreen increases Mizrahi guarantees

Shaya Boymelgreen, the controlling shareholder in Boymelgreen Capital Ltd. (TASE:BMGN), is being forced to increase his personal guarantees to Mizrahi Tefahot Bank (TASE:MZTF) to $50 million from $25 million. Other terms of the guarantees remain unchanged.

Boymelgreen Capital reported the item to the Tel Aviv Stock Exchange (TASE) after its board of directors and its audit committee authorized the increase in the guarantees as a deal between the company and its controlling shareholder. Shaya Boymelgreen owns 89.8% of the shares in the company

In 2006, Boymelgreen Capital bought Azorim Investment, Development and Construction Ltd. (TASE: AZRM) at a market value of about NIS 1.95 billion. The acquisition was funded, in part, with a NIS 450 million bond issue, as well as a $165 million loan from Mizrahi Tefahot.

All of Boymelgreen Capital's shares in Azorim were put up as collateral for the Mizrahi loan, as well as those of another of Shaya Boymelgreen's firms.

The increase in the guarantees by Boymelgreen Capital are related to a cash crunch it is facing, as last week two deals, to sell 5 hotels, fell through, as well as a deal to sell holdings in the Sheraton City Tower in Ramat Gan.

The lack of investors' confidence in the firm can be seen in its bond yields, with a Series A bond yielding 482%, and a Series C bond yielding 196%. The share price has fallen 87% in the past twelve months.

Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2009

Boymelgreen increases Mizrahi guarantees

With sales deals collapsing, personal guarantees are raised.