Delek Real Estate seeks payment deferral

Debt in question is NIS 130 million. Calcalist learns that Delek Real Estate board carefully avoiding any mention of a debt arrangement or resorting to haircut. New deadline set for January 31

Golan Hazani, Calcalist|Published: 07.25.11 , 16:17

Delek Real Estate will ask bondholders for a deferral on the repayment of the principle on its 25-Series bond to the end of January in return for raising the bond's interest at an agreed rate, the company's board decided around midnight Sunday.

The payment the company seeks to defer totals NIS 130 million (about $38 million) and constitutes 50% of the remaining principle.

The boards advised TASE that it had "reached the conclusion that for the time being, the company's ability to meet its long term obligations is doubtful and therefore there is a need to formulate an updated debt repayment scheme.

"Under these circumstances, the board instructed company management to promote among its financial creditors and bondholders an agreed repayment deferral of the entire principle until January 31, 2012 which is presently due for payment."

Additionally, the company announced that "during the deferral period, the 25 Series bondholders will receive higher interest in lieu of the deferred payment."

Delek Real Estate CEO Eran Meital responded that "the company decided to ask its bondholders to approve a short postponement of approximately five months in the belief that it is for the good of the company and its investors."

The deferral is for five months after the bond's original maturity date which according to the bond amortization schedule is September 5, 2011, last Friday being the ex date.

It should be mentioned that last week, Delek Real Estate's board requested management to propose a solution to the debt predicament and last night the chips fell and the board decided on the aforementioned payment deferral.

At the same time, Delek Real Estate's controlling interest, Yitzhak Tshuva has agreed to a postponement of a NIS 80 million ($24 million) payment he was to receive on his 2-Series bonds (due November and December).

In addition, Delek Real Estate will not meet its NIS 45 million ($13 million) obligation to the Phoenix due in August and the company will inform the Phoenix that it would repay the debt once the assets the Phoenix has a lien upon are realized in lieu of the loan. The NIS 31 million ($9 million) interest on the 5-Series bonds will be duly paid.

During the deferral period the company aims to formulate an updated scheme to ameliorate its two main assets – Elad Israel and its car park chain NCP after which it will reassess its condition in an attempt to meet its obligations.