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Bottom Shekel Differences Between Lev Leviev and Moti Zisser

Zisser and Leviev are two skullcap-wearing businessmen whom God must have decided to test very rigorously.

In many respects, real estate mogul Moti Zisser didn't make it through the global financial crisis unscathed. He did make it through the worst of the troubles but now he's being haunted by huge personal debt, bonds that dropped for days on end, trouble from his bankers and stock sinking like a stone. Shares of his company Elbit Imaging plunged 17% on Monday. In short, he's dealing with one massive heap of uncertainty.

All this brings to mind the dark days of Africa Israel Investments, controlled by Lev Leviev. Zisser and Leviev are two skullcap-wearing businessmen whom God must have decided to test very rigorously. But just this week, with Zisser suffering some of the worst days of his life, Leviev celebrated his comeback with a tour for reporters and analysts of the new mall he opened in Moscow.

Lev Leviev
Ofer Vaknin

There was a good reason to celebrate: Africa Israel is now worth NIS 2.5 billion. Zisser's Elbit Imaging is worth just NIS 700 million.

The differences between the two go beyond the fact that Zisser is just now heading downward, while Leviev can already see the light on his way up. For Leviev the crisis began at the bottom, with clear economic troubles in his company's business - large debts amid tanking asset values - while up on top, his personal fortune was somewhat more secure. Indeed, Leviev reached into his pockets and poured hundreds of millions of shekels into the company to help settle its debts.

In Zisser's case, though, the crisis began at the top - albeit after a two-year delay - with a personal debt that he has difficulty bearing, while down below, in the company itself, everything looks more or less all right. So the financial difficulties of the two developed in opposite directions.

The owner's problems ostensibly shouldn't interfere with the functioning of the company, but that isn't actually the case. It doesn't really matter where the crisis begins; what matters is how to end it. If Zisser doesn't get everyone calmed down, then Elbit Imaging will also be in trouble.

Elbit Imaging needs to repay banks and bondholders NIS 3.3 billion by 2013, NIS 1.2 billion of which must be repaid by the end of this year. To do so, the company will need to raise money. But given the high 11% yield in the company's bonds, Elbit Imaging will be hard-pressed to raise the necessary funds and could be forced into insolvency.

Like Leviev, Zisser can survive this situation intact if he acts in time. In 2007, after a successful share issuance in Europe, Zisser's stock was worth billions. He could have sold off some stock then and erased a good part of his debt but, like Leviev, he believed in himself too much to do that.

Zisser has owed Bank Hapoalim hundreds of millions of shekels since he bought control of Elbit Imaging, with his stock securing the debt. The fact that the share prices is now taking a dive has the bank worried. Elbit Imaging shares are at their lowest in many years, even lower than they were in 2008, in the depths of the global financial crisis. Why are they dropping? Among other things, because of the uncertainty pertaining to Zisser himself.

In other words, this is a financial conundrum that isn't easy to solve - but it is possible. Elbit Imaging isn't in great shape, but it's not doing too badly either, and its bonds might even be a good bargain. But meanwhile Zisser doesn't seem to be fixing the problem. His occasional speeches do convey the impression that the business is doing fine, which is true. But that's not enough to dispel the anxiety.