Sources inform ''Globes'' that, even following the debt settlement by Africa-Israel Investments Ltd. (TASE:AFIL) with its bondholders and bank creditors, the Leviev group is still at the top of Bank Hapoalim's (TASE: POLI) list of problem borrowers.
Lev Leviev's private company, Memorand Management (1998) Ltd. (through which Leviev controls Africa-Israel), owes Bank Hapoalim NIS 1.3 billion, which the bank classifies as "problem debt". The bank classifies half of the debt as "doubtful debt", i.e. debt against which the bank has made a provision. The bank classifies NIS 225 million of Africa-Israel's debt as "problem debt".
The debt settlement reduced Memorand's problem debt by 10%, and Africa-Israel's problem debt by 20%.
In May 2010, Africa-Israel signed a debt settlement, several months after beginning negotiations on it. The company faced cash-flow problems caused by the global credit crunch which adversely affected its real estate investments in the US and Russia.
As part of the debt settlement, Africa-Israel converted 13 series of bonds, totalling NIS 7.4 billion, into two new bond series: one medium-term bond totaling NIS 1 billion, which has already been repaid; and a long-term bond (Series 26) totaling NIS 3.6 billion, which will be repaid by 2025.
At the same time as the Africa-Israel debt settlement, Leviev rescheduled Memorand's debt. According to information obtained by "Globes", Memorand repaid Bank Hapoalim NIS 700 million in cash by the end of 2010, as part of the debt settlement. Nevertheless, Leviev and Memorand still top the list of the bank's problem debt.
Under the terms of Memorand's debt settlement with Bank Hapoalim, signed in June 2010, Memorand's debts were rescheduled over a long period. The bank made a recovery (recording the receipt of previously considered bad debt) of NIS 60 million, even though the market value of the Africa-Israel shares used as collateral against Memorand's loan from the bank was actually greater.
Africa-Israel's share price rose 0.1% today to NIS 28.96, giving a market cap of NIS 3.04 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2011
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