Global Knafaim Leasing has agreed in principle to a set of demands by bondholders to assure them the company will meet its future payments.
The trustee of the company's series B1 bonds, Reznick Paz Nevo Trusts, said on Thursday that the sides had signed a memorandum of understanding for setting three restraints on the firm's financial activities. Under the agreement, ratified unanimously in a bondholders' assembly on Sunday, Global Knafaim will limit its annual dividend payments to $6.5 million, subject interested party transactions to bondholder approval, and maintain $10 million in unfettered liquid assets to ensure it can meet its liabilities to banks and bondholders.
The company also agreed to a provision that if early repayment is ever made on its bank loans, it would also provide for the early redemption of its bonds.
Company management has two weeks to fully commit to the agreement.
Global Knafaim Leasing, part of the Knafaim Holdings group of companies controlled by the Borowitz family, and which also includes El Al Israel Airlines and Arkia, buys, leases and sells passenger and cargo aircraft. Worried that a continuing slump in the aviation industry would make it difficult for the company to repay its debts on time, bondholders asked the company's owners in November to insert the three amendments into the deed of trust, threatening to demand immediate repayment if it didn't. The bonds, which total NIS 200 million, are trading at around a 10% yield and are redeemable until 2020.
Global Knafaim is managed by Shlomo Hanael and is listed on the Tel Aviv Stock Exchange at a value of NIS 185 million. Institutionals with major holdings in the company's bonds include Migdal Capital Markets and Clal Finance, which both spearheaded the effort to amend the deed of trust, as well as Meitav Investment House and Excellence Investments.
"While most companies in the markets try to dodge their obligations, it is rare to see a company being decent with its bondholders," said one owner of Global Knafaim bonds, praising the company's management for understanding their concerns and fully cooperating with their requests. "We are satisfied with the company's strengthened financial position and its strengthened ability to repay the bondholders."
