Shaya Boymelgreen's Israel real estate arm Boymelgreen Capital Ltd. (TASE:BMGN) apparently cannot meet its commitments to its bondholders, and may be facing insolvency.
At the end of April, Boymelgreen Capital must pay 16.7% of the principle plus a 6.7% coupon interest payment on a NIS 180 million bond issue. The company failed to meet its cash flow plan published in December 2008, which was to include proceeds from the sale of the Assuta Medical Centers compound in north Tel Aviv and bringing in a partner to subsidiary Azorim Tourism Ltd.
In a notice to the TASE today, Boymelgreen Capital said, "Due to concern about the upcoming payment, the company will open negotiations to reach an arrangement with its bondholders. The company expects difficulties in meeting its plan for the sale of assets in the coming months."
Investors' lack of confidence in the company is seen in the yield for its bond: over 1,000% for the Series A Bond and 245% for the Series C Bond.
Boymelgreen Capital has not yet published its financial report for the fourth quarter of 2008, but the company's auditor, Deloitte Deloitte Brightman Almagor Zohar issued a going concern warning together with the company's financial report for the third quarter of last year. With a negative cash flow of NIS 193 million and posted a net loss of NIS 129.3 million in January-September 2008, few investors expected the company to meet its obligations on time.
Shaya Boymelgreen owns 89.9% of Boymelgreen Capital, which owns 64% of Azorim Investment, Development and Construction Ltd. (TASE: AZRM), 25% of Azorim Tourism Ltd. (Azorim owns the rest), and 50% of the Assuta Medical Centers compound in the Tel Aviv. Azorim owns 74% of Lagna Holdings Ltd. (TASE;LGNA), Azorim develops projects in Israel, the US, and India (through Azorim International Holdings Ltd.). Lagna, which controls the Engel Group and its subsidiaries, develops projects in Israel, Eastern Europe, and the US. Boymelgreen Capital has no substantial income from current operations, so its ability to pay its debt essentially depends on the dividends it receives, as well as from management fees, the sale of holdings, and owners' loans.
Published by Globes [online], Israel business news - www.globes-online.com - on March 19, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009