Business roundup / Green cars to cost more
Eliezer Fishman divesting in Canada, bondholder sues to liquidate Petro Group
"Green" cars are about to become costlier in Israel. As intended, tax incentives really did drive Israelis to fuel-economizing cars in droves. From almost no market share in 2007, fuel-economizing cars have conquered about 10% of the Israeli market. All this gave the Tax Authority a bright idea. The deficit looms very large this year – and next year too – and tax revenues have been falling short of target. So why not jack up tax on the super-popular minis and other "green" vehicles? And so it will be. The authority is working on a new tax formula for green cars, which will ultimately cost the consumer more.
Real-estate investor Eliezer Fishman is selling the SunnySide Mall in Halifax, Canada for about NIS 100 million to help deleverage his business group, which owes many billions to bondholders and banks. The Fishman group will apparently make roughly NIS 40 million profit on the deal. Bonds of Fishman group companies have been trading at yields of around 10%, making refinancing out of the question, hence his divestitures of late: Just last week the group sold three stories of a business tower in Herzliya for NIS 53 million. As of late March, his company Jerusalem Economic owed bondholders and banks NIS 4.8 billion; Industrial Buildings Corp. owed about NIS 7.3 billion, and Darban owed about NIS 2.1 billion.
In other debt news, Isralom bondholders have named a representation to handle debt-settlement negotiations with the company, which is owned by Matthew Bronfman (who also owns a controlling interest in Discount Bank) and others. Isralom bonds are trading deep in junk territory, at yields of 30% to 49%. The company owes bondholders NIS 215 million and the banks NIS 930 million more. During the next two years it's supposed to repay NIS 314 million. Bondholders are particularly concerned about Isralom's investment in the Super-Sol retail chain: It may be Israel's biggest but its stock is down 50% in the last 12 months.
A bondholder has privately sued for the liquidation of the Tel Aviv-listed Petro Group, whose bonds are trading at yields of more than 350 percent – beyond junk territory and somewhere in outer space. In parallel with this development, Petro made a third debt settlement offer to its bondholders: It would pay them about NIS 10 million a year as a principal repayment, but only after it pays its lawyers and auditors some NIS 2 million and makes a payment to management. Petro's trouble is that its main asset, a company called GPM, isn’t profitable or meeting its financing costs.