Bondholders Ease off Shaya

By Michael Rochvarger, Haaretz
http://www.haaretz.com/hasen/spages/1100057.html

A debt arrangement has been hammered out between Boymelgreen Capital bondholders and controlling shareholder Shaya Boymelgreen. The company owes bondholders NIS 434 million, but they have agreed to accept NIS 220 million in cash and the rest in shares currently worth NIS 12 million.

The cash payment will be postponed, and the company will issue NIS 150 million in new bonds, payable starting in 2014, to cover part of that debt. The remaining NIS 70 million in bond debt will be paid with an issue of capital notes, due in 2024.

Shaya Boymelgreen’s holding in the company will be diluted from 90% to 60%, and he will forego an NIS 150 million shareholder’s loan, an NIS 150 million capital note he deposited in the firm and company bonds worth NIS 24 million. This means he will be giving up a total of NIS 324 million in loans to the company. Boymelgreen will keep the company reins for now, but if he fails to meet the payments on the new bond series, the bonds will be converted to shares and institutional investors could accumulate a 51% holding and gain control of the company.

To be finalized, the agreement reached with representatives of the big institutional investors has to pass a vote at the general assembly of bondholders.

The arrangement is being promoted by Psagot. Other institutional bondholders of Boymelgreen Capital include Analyst, Harel, Phoenix, Excellence, and Halman-Aldubi.

Until 60% of the new bond series is repaid, the company won’t be paying tis shareholders any dividends. The institutionals will also be closely supervising any change of control at Boymelgreen Capital, as well as any insider transactions.

In parallel, Shaya Boymelgreen is negotiating to restructure his loans from Bank Mizrahi-Tefahot. He owes that bank alone NIS 650 million, taken in 2006 to buy the real estate company Azorim. Sources in the know say that the builder and the bank are close to an accord.