The Paz Oil energy company, which used to own the Israel franchise of the Burger Ranch, is suing to have a receiver appointed to the meat patty chain over money owed from the past.
Paz, which belongs to banker and general businessman Zadik Bino, has asked the court to appoint a receiver to the chain. Paz wants to exercise collateral securing a NIS 14.8 million shareholder loan by having the chain itself sold. The debt itself, Paz explains, is owed by Burger Ranch's current controlling shareholder.
Industry sources said yesterday that Burger Ranch's suppliers are likely to object to the request for receivership. That said, there's already a potential buyer for the fast-food chain in the picture - Burger King Israel, which has tried to buy its rival before and now means to try its luck again.
Paz also wants the right to cherry-pick Burger Ranch Israel's assets, apparently: it has asked the court to empower the receiver to block dispensation of any assets.
Paz says it filed the request after Burger Ranch repeatedly failed to make repayment instalments to Paz. It also says that it received neither the quarterly payment due at the end of June, nor one half of Burger Ranch's cash flow due in early April, which it should have received under the loan agreement.
Paz sold the controlling interest in Burger Ranch Israel to Yossi Hoshinski in 2005, who undertook to pay Paz NIS 20 million in 32 quarterly payments, beginning in March of 2007. Additional loan repayments were to be paid in the form of one half of the chain's cash flow from ongoing operations, based on its financial reports.
Various assets, including Burger Ranch shares and those of its subsidiary, the firm's manufacturing facility and its assets, were provided as collateral for the loan.
But in early 2008, Hoshinski passed away unexpectedly from a heart attack, and his brother, the firm's CEO, Rami Elad, stepped into his shoes.
Elad, has already asked to delay repayments a number of times.
In the request it filed in court, Paz says Elad sent a letter to the company on Monday, laconically informing the company that Burger Ranch's financial situation had taken a turn for the worse. A few hours later, Elad sent another letter. "Following my announcement of this morning, I wish to inform you that the company's credit line from Bank Leumi has been cancelled." Paz alleges Elad announced that the company would be unable to meet its loan repayment obligations, and that Burger Ranch was on the brink of collapse.
The judge who heard the request, however, ruled there was no evidence pointing to an immediate danger that other creditors would try to take the law into their own hands. Burger Ranch was ordered to file its response to the request within 20 days.
Burger Ranch's difficulties have become gradually more apparent recently. Corporate disclosures revealed that the chain had failed to pay some of its employees their July salaries. Burger Ranch confirmed some of its workers had not received their salaries, and said it would pay them shortly.
In addition, Burger Ranch's credit risk rating has recently been lowered from low to average. Its rating was lowered against the backdrop of the company's restructuring.
Meanwhile, the competition is already eyeing the scraps. Burger King is reportedly already angling for Burger Ranch shares. This is the second time Burger King has tried to take over its competition. In 2004, when the chain was still owned by Paz, its bid was blocked by the Antitrust Authority, which stated that the deal would be anticompetitive.
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