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Israeli businessman Gad Zeevi is so strapped for cash that he has agreed to borrow money, via one of his privately owned companies, from British Israel Investments - at a hefty 21% rate of interest.

The NIS 40 million he's borrowing is coming from British Israel subsidiary Israel Malls. It will carry a six-month interest payment of NIS 4 million, reflecting an annualized interest rate of 21%.

Zeevi plans to repay the loan in a lump sum on August 9, 2009.

A source at British Israel says that under certain conditions, Zeevi could repay the loan sooner.

British Israel is controlled by British businessman Leo Noe, and is managed by Amir Biram.

British Israel and Zeevi are partners in Haifa's Grand Canyon mall, via the two companies that own and manage the mall, MKH Shopping Center and Grand Canyon Management. Zeevi owns 29.25% of the regular shares and 48.75% of the preferred shares in MKH, and 29.25% of the shares in Grand Canyon Management. British Israel owns 70% of MKH and 50% of Grand Canyon.

All Zeev's shares in both firms are backing the loan. But British Israel will be second in line if Zeevi defaults, as the shares have already been used to secure bank financing.

British Israel's financial report for 2007 assessed the Haifa mall at NIS 900 million. The mall is fully leased and the management company collects monthly rent payments averaging NIS 123.30 per square meter.

Zeevi, who disappeared from view for a few years after being accused of fraud and money laundering, has been managing his affairs here via private companies. His Israeli holdings in publicly traded companies include Subaru importer Japanauto (50%) and shares in Metis Capital, which is controlled by Amnon Barzilai and Moni Harel.