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Nahariya's Kanion Hazafon mall is having trouble repaying its debt to Israel Discount Bank - a debt that, according to sources in the commercial real estate business, exceeds NIS 100 million.

Responding to a question on the matter, Adi Hami, the mall's director-general, said: "At the moment, there are financing problems with Discount bank, but the mall's management has submitted a proposal to roll the loan over and has also constructed a plan based on shared principles, and the bank is negotiating over it with the mall's management. The data on [the size of] the debt is inaccurate."

The mall was profitable, Hami added, saying the debt stemmed from the costs of financing its construction.

Discount has suffered heavy losses in the past from other bad loans to commercial real estate ventures, and it is currently trying to sell off several assets whose owners defaulted on the loans they took out from Discount to finance construction.

Kanion Hazafon's situation is apparently better and the bank is not currently considering applying for a court-appointed receiver for the project. However, banking sources said, Discount had almost certainly made provisions for the mall's debt.

The bank had also explored the possibility of replacing the mall's current management with a mall management company, the sources said. However, this would be possible only if a court were to approve the appointment of a receiver for the mall.

"Bringing in a management company is not on the agenda," Hami said. "The bank has not taken any steps against the mall's management and owners."

Discount refused to comment on the affair, saying it did not divulge information about its customers.

Kanion Hazafon, which opened in November 1998, cost NIS 160 million to build. It is located at the southern entrance to Nahariya, on the main Acre-Nahariya-Rosh Hanikra highway. It is owned by a consortium of textile magnates: Yossi Yisrael, Meir Bloom, Yitzhak Tarzersas, Benny Timent, Yaakov Baranes, Ron Levy and Zion Shiraz. Another major shareholder is attorney Zvika Laufer, who was the driving force behind the project.

The mall has 10,000 square meters of commercial space, including two floors of shops and one floor of offices. Following the closure of the 1,200-square-meter Co-Op supermarket six months ago, the largest businesses in the mall are the Globus Group movie theater (1,000 square meters) and a Superpharm drugstore (500 square meters). Several leading fashion chains are also represented at the mall. The mall's management is still negotiating with Blue Square, Co-Op's owner, over what to do with the vacant Co-Op space.

Kanion Hazafon also faces tough competition from a nearby 16,000-square-meter mall that opened about 18 months ago. That mall also has a Superpharm and several leading fashion stores. In addition, unlike Kanion Hazafon, it is open on Shabbat.