Africa-Israel puts up Tel Aviv mall as loan collateral

Subsidiary Africa-Israel Properties is also continuing its efforts to sell the Ramat Aviv Mall.

Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) has put up the entire 73.4% holding in the Ramat Aviv Mall in north Tel Aviv as collateral for a NIS 350-400 million loan from Bank Leumi (TASE: LUMI). Africa-Israel's stake in the mall is held through subsidiary Africa-Israel Properties Ltd. (TASE: AFPR). Africa-Israel, controlled by chairman Lev Leviev, owns 68% of Africa-Israel Properties. Leviev is also continuing his efforts to sell the mall.

Africa-Israel Properties has pursued sales talks for its malls, including the Ramat Aviv Mall, with several potential buyers in recent months. Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), which owns the other 26.6% in the Ramat Aviv Mall, has first refusal rights at the same price as in any deal with a third party.

Over the past year, Africa-Israel has been seeking to sell properties for at least NIS 1 billion in an effort to raise money to meet its liabilities to its bondholders. However, the global crisis has whittled away the number of potential buyers, and buyers with the wherewithal for a deal are exploiting the sellers' distress to demand large discounts.

The yield on Africa-Israel's bonds has soared to junk bond status to 30-56% in the past year, reflecting investors' worries about the company's ability to meet repay its debts.

Africa-Israel's share rose 1% by midday on the TASE to NIS 32, and Africa-Israel Properties' share fell 2.3% to NIS 38.16.

Published by Globes [online], Israel business news - www.globes-online.com - on March 8, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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