Real estate developer Lagna Holdings Ltd. (TASE;LGNA) is in dire straits, and its auditor has attached a going concern warning to its financial report for the fourth quarter and full year of 2008.
Lagna Holdings is the parent of Engel Construction and Development Ltd. and its units Engel General Developers Ltd. (Nasdaq: ENGEF), Engel Europe Ltd. (TASE: ENGR1 ,ENGR5), Engel East Europe NV (AIM:EEE), which develop properties in the US, Europe, and Israel. Shaya Boymelgreen controls Lagna through Boymelgreen Capital Ltd. (TASE:BMGN) subsidiary Azorim Investment, Development and Construction Ltd. (TASE: AZRM). Shaya Boymelgreen serves as chairman of both Azorim and Lagna.
Lagna lost NIS 94 million in 2008 and, at year end, had a shareholders' equity deficit of NIS 134 million after a negative cash flow of NIS 113 million. The company has more than NIS 1 billion in current liabilities and another NIS 1 billion in long-term liabilities, which resulted in financing expenses of NIS 183 million last year.
Lagna had just NIS 9,000 in cash at the end of 2008, and NIS 53 million in current assets, raising the question as to how it will meet its debts.
Lagna has already suspended its operations in Ukraine, after buying land for over $60 million. It has not received ownership to one residential property in Kiev, which it bought for $47 million a year ago. The chief contractor for a project in Hungary has sued Lagna for NIS 38 million.
Lagna's share fell 3.1% to NIS 3.20 today, giving a market cap of NIS 34.1 million. The share is down 91% from its 52-week high of NIS 38. Azorim acquired Lagna from Yaakov Engel for NIS 583 million two years ago. Azorim's share rose 5.2% today to NIS 8.95, giving a market cap of NIS 312.8 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 31, 2009
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