Delek Real Estate Ltd. (TASE: DLKR) controlling shareholder Yitzhak Tshuva last night signed a memorandum of understanding with the representative of the company's series 4, 5, and 25 bondholders, under which, subject to terms detailed in the agreement, Tshuva will inject NIS 63 million capital into the company in favor of the bondholders.
The Series 25 bondholders will defer payment of the principal, which was due on September 3, 2011, to January 31, 2012, in exchange for payment of NIS 13 million in compensation to be paid on February 15, 2012. This payment will be made out of a subordinated loan that Tshuva will provide the company.
In addition, on July 31, 2012, Tshuva will make a NIS 50 million offer to purchase for all of Delek Real Estate's bonds, according to the par value of each bond.
Last night's agreement is intended, in part, to enable Delek Real Estate to complete negotiations in the coming months with US equity fund CIM Group for the latter to invest in the company, and for Delek Real Estate to reach a comprehensive settlement with its bondholders.
Delek Real Estate owns income-producing real estate in Israel, Canada, and Western Europe. Since its financial difficulties began three years ago, the company has been selling properties in order to pay its debts in time. It has sold properties for over NIS 5 billion to date, but still faces cash flow problems.
Delek Real Estate's share price rose 5.8% after trading resumed this morning to NIS 0.14, giving a market cap of NIS 55 million.
Published by Globes [online], Israel business news - www.globes-online.com - on September 26, 2011
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