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Ongoing talks over a debt settlement for Yossi Maiman's Ampal-American Israel have been likened by insiders to a certain rough-and-tumble card game. Holders of the company's B2 bond series, voting on liquidation proceedings, tried to maintain a "poker face" as Maiman laid out his hand and repeated his unverifiable mantra: "I have no money to ante up." Meanwhile, through CFO Irit Eluz, Maiman threatened to refrain from assisting Ampal in dealing with Egyptian authorities if the holding company is put into liquidation.

The proposed outline for a settlement agreed upon Tuesday night by representatives of the bondholders and the company has sparked mixed reactions among investors, who are scheduled to vote on the agreement in two and half weeks. It looks like bondholders will get to keep some of their chips but Maiman will win this round, walking away from the table with his control over the company intact.

Ampal found it itself in a cash crunch due to the pipeline carrying natural gas from Egypt to Israel, in which it owns a 12.5% share, being repeatedly blown up by hostile elements. The company consequently asked for, and seems to have received, a two-year postponement on bond principal payments. Bondholders had wanted to see a major contribution coming from the controlling owner. But according to the announced outline, Maiman's contribution will be rather modest - a $6 million injection to cover most of the company's 2012 management costs, estimated to be $7 million once these costs are scaled back 50%, as promised. In contrast, over the past ten years Maiman has extracted about $300 million from Ampal in salary costs and through various insider deals, mostly by selling the company chunks of his own personal holdings in the East Mediterranean Gas pipeline.

Idan Azoulay, CEO of Epsilon Mutual Funds, panned the emerging arrangement, complaining that the company's top management has failed, yet continues to draw absurdly high salaries. Eluz, for example, is paid $1.5 million a year. "We are left with the risk in the hope that EMG will be worth something. That would be the only upside," he said.

"There is no real obligation by the ownership, and this is after they exploited the company for their own personal benefit and neglected the public shareholders for years," claims Azoulay. "If I had blundered in my job the way they have, I would have been sent home long ago. I see no justification in allowing this company to continue existing. We have here a complete loss of confidence, and I hope this isn't the final word."

Another high-placed bondholder, though, was actually satisfied with the arrangement and complimented bondholder representatives. "It is reasonable considering the circumstances," he said, asking that his name not be revealed. "I would be happy if it were possible to strip Maiman to his underwear, but let's be frank. It wasn't possible. Their initial offer was much worse. After all, our goal is to squeeze as much money as possible out of the bonds."

Maiman's aces

The senior-level bondholder mentioned the two "aces" Maiman is waving around to intimidate bondholders in their poker match, while he remains cool, calm and collected. The first ace is that because Ampal is registered in New York it would be extremely difficult to initiate liquidation proceedings in an Israeli courtroom, even over its Israeli assets, since a U.S. court could insist on retaining complete jurisdiction. If that were to happen the Israeli lawyers would be faced with a lengthy and costly battle that would require them to hire a team of American lawyers and join a frequent flyer program. This is actually one of the reasons Maiman bought Ampal in 2001 and agreed to pay a high premium over its market value. Another benefit to the company being registered in New York is that it enables the board of directors to okay insider transactions between Maiman and the company without requiring a general shareholders meeting.

Maiman's other ace is his contribution to the company. Ampal is practically a one-man company, and the mysterious image he cultivates meshes well with his past service in Israel's Mossad agency. Maiman claims to be the only person capable of dealing with Egypt's current situation due to his previous espionage activity. But he has made it known that he will refuse to assist the company if it goes into liquidation. EMG's situation remains an enigma for company investors who wouldn't be able, or willing, to step into Maiman's shoes in this regard.

Another point in Maiman's favor is that the values of many of Ampal's holdings still aren't clear, including its full ownership of Gadot Chemical Tankers and Terminals and an ethanol project in Colombia. Gadot is Ampal's largest holding after EMG. The company's value has been expanding, but most of its shares are being held as security by Israel Discount Bank.

Bondholder representatives have, in effect, given Maiman a one-year extension, allowing Ampal to spend $1 million from its kitty on management. It is almost certain that next year the sides will meet again for another round.

The representative committee for series B2 bondholders, which includes attorney Arie Danziger, Yaniv Zalel of Meitav Investment House, and Mordi Meshita of Clal Insurance Enterprises Holdings, said, "We object to controlling owners who don't meet all their liabilities to bondholders and don't do all they can to fulfill them. The representative committee, after weighing all the alternatives available to the bondholders, saw fit to recommend that the bondholders' meeting approve the principles of the agreement. The final overall agreement will not be ratified until all the details under negotiation have been resolved with (holders of ) the other bond series within 60 days.