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Bank Leumi is refusing to waive some of the debts owed by Itschak Shrem and Yair Fudim, and is thereby stalling an NIS 132 million debt arrangement for Leader Holdings & Investments.

Leader also owes NIS 216 million to bondholders.

Under the terms of the debt arrangement, Leader's controlling shareholders, Shrem and Fudim, were due to hold a tender for the sale of a controlling stake in the company at the beginning of this week. The sale would have generated cash to pay Leader's debts to Leumi and the bondholders.

At the end of last week, however, the company suddenly decided to postpone the tender by two weeks, after Leumi objected to waiving some of Leader's debt.

The sale of the controlling stake in Leader was supposed to be part of a package deal in which the company's creditors would forgive some of its debts to them.

The institutional investors that own Leader's series B4 bonds include Excellence Nessuah Investment House and the Harel and Menora-Mivtachim insurance groups.

Sources close to representatives of the series B4 bondholders say they have held talks with Leumi in recent weeks to try to find a formula that would allow the tender to proceed. During these talks, they attempted to persuade the bank to forgo some of Leader's debt.

However, the sources said, Leumi was unwilling to reach any arrangement until Leader's potential buyers infuse the company with tens of millions of shekels in cash.

In addition, the sources noted, Leumi officials were not pleased that under the proposed arrangement, Leader's parent company, Shrem Fudim Group, would still owe the bank some NIS 40 million.

Shares of Leader Holdings lost 7.7% on the Tel Aviv Stock Exchange yesterday, on turnover of NIS 21,280.