The Maariv Group is planning to raise capital over the next few months to cover a NIS 31 million payment of principal and interest owed to bondholders in March 2010.
Maariv's bonds are now trading on the Tel Aviv Stock Exchange at prices that reflect 33% yields, which is considered junk bond levels. Such rates reflect serious fears by investors that Maariv will default on its debts.
The media group, controlled by the Nimrodi family's Israel Land Development Corporation, intends to sell securities to the public. It filed a draft prospectus with the Tel Aviv Stock Exchange back in October and has since reached understandings with several underwriters over the planned flotation, including Poalim IBI, Excellence Underwriting, Rosario Capital and Meitav Underwriting.
The structure of the securities issue has not yet been publicized, but it is expected to include both shares and bonds.
ILDC is expected to invest millions of shekels in the issue. In addition, the underwriters are expected to provide Maariv with an underwriting commitment, meaning that the underwriters will buy securities if there is insufficient demand from the public.
Maariv's cash flow problems have been steadily worsening. In the third quarter of 2009, the group lost NIS 11.2 million, bringing its total losses for the first nine months of the year to NIS 49 million. Net losses for all of 2008 totaled NIS 132 million. The group's revenues shrank by 8.5% in the third quarter of 2009, to just NIS 98 million, and cumulative revenues for January-September were NIS 285 million, down from NIS 319 million in the parallel period last year.
In the company's latest financial statement, its accountants warned that in order to continue operating in its current format and meet its financial obligations, Maariv would have to follow a business plan and cash flow forecast derived from its financial situation and obtain loans from both banking and nonbanking sources.
"Maariv will report to the bourse in keeping with the law when there is something to report," a Maariv group spokesman responded.
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