How will Boymelgreen repay bondholders?

At the end of next month, Shaya Boymelgreen's Boymelgreen Capital is supposed to pay bondholders NIS 45 million in principle and interest. The problem: The company's coffers are empty and its equity capital deficit totaled NIS 34 million at the end of September 2008.

Boymelgreen owes NIS 400 million to bondholders and another NIS 600 million to Bank Mizrahi Tefahot.

Boymelgreen, who is well aware of his problem, has been trying - and failing - to scrape together the funds for months. Boymelgreen's main source of cash, Azorim Investment Development and Construction, has dried up completely, mainly because of the woes of its subsidiary Lagna holdings.

Azorim will probably record a capital loss of hundreds of millions for its purchase of Lagna: It paid NIS 400 million for the company, which is now worth only NIS 30 million.

Azorim has so far generated NIS 125 million in dividends for Boymelgreen, but last year's losses make future dividends unlikely. Boymelgreen is also having trouble selling his holdings in Tel Aviv's Assuta compound as well as his hotel chain, which have a combined value of NIS 150 million.

Boymelgreen Capital was a publicly traded shell company when Boymelgreen acquired it at the end of 2005. Since then he has brought in NIS 300 million in shareholder loans that might never be repaid.

Last week TheMarker reported that Boymelgreen was seeking a buyer for his controlling stake in Boymelgreen Capital. This would bring new capital, enabling the company to meet its financial obligations.

As good as that sounds, Boymelgreen is unlikely to meet the fast approaching bond repayment date, and time is running out.

Last Monday Boymelgreen announced he would be convening a bondholders' meeting in April, to discuss "a company report on the condition of its business affairs, and answers to [bond]holders' questions."

The way thing look at present, Boymelgreen will have to tell participants that he does not have enough money to pay them.