Sources inform ''Globes'' that CIM Group Inc. will not invest in Delek Real Estate Ltd. (TASE: DLKR) under the proposed deal.
CIM, a Los Angeles-based developer, is supposed to buy Yitzhak Tshuva's 55% stake in Delek Real Estate. Under the letter of intent signed by the companies in August, CIM was to inject NIS 500 million into Delek Real Estate in the form of a subordinate owners' loan. Tshuva had agreed to provide a NIS 100 million owners' loan.
The deal is due to be signed tomorrow, but CIM Group's owners, Israeli expatriates Avi Shemesh and Shaul Kuba, refuse to commit to a debt settlement for Delek Real Estate without a massive discount on the company's NIS 2.1 billion debt to bondholders. The parties have reportedly kept the door open to a deal.
Delek Real Estate was unavailable for comment.
Delek Real Estate's auditors attached a going concern warning to the company's financial report for the second quarter of 2011. The company lost NIS 386 million in the second quarter and has a shareholders' equity deficit of NIS 1.7 billion. Most of the company's losses are due to downward fair value revaluations on one of its last remaining foreign properties held through Delek Global Real Estate Ltd. - a portfolio of 127 car parks in the UK leased to National Car Parks Ltd. whose value was cut by NIS 717 million. The fair value of the companies' properties in Germany was cut by NIS 112 million.
Despite selling properties for over NIS 5 billion in the past three years, Delek Real Estate has been unable to emerge from its financial difficulties, and without a debt settlement with its bondholders, it will not be able to pay them in time.
Delek Real Estate's share price fell 11.8% today to NIS 0.165, giving a market cap of NIS 60 million.
Published by Globes [online], Israel business news - www.globes-online.com - on September 11, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011