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Until recently, Benny Steinmetz was a major example of an Israeli who made it big on an international level, but also somebody known for his secrecy and daring.

Everyone said he operated in exotic locales in a wide range of areas including real estate, mining, engineering, infrastructure, finance - but most of all in diamonds. But all of a sudden in the past few weeks this has seemed to blow up in his face: Like certain other businessmen, after avoiding publicity and the stock market for decades, in recent years he came to the markets and raised billions, and was forced to reveal quite a bit more than he might have wanted to. His full financial health is not clear since much of his holdings are private.

The Benny Steinmetz Group has seen the shares in its publicly traded subsidiaries, Bateman Engineering, Bateman Litwin and Katanga, plummet by 92% to 97%.

Bondholders are likely to demand their money back immediately at a meeting next Tuesday. The question everyone is asking is what is his true financial situation? BSG Resources says while there may be problems in the diamond industry, the company is strong and will pay off every cent it owes. However, Steinmetz has a real problem with TMI bondholders. A 75% majority can demand on Tuesday that he pay off all the bonds - and at full price without any of the haircuts he proposed in the past, because the bonds have dropped to below the minimum BBB+ rating. This would mean the firm would have to come up with $750 million immediately.

Steinmetz carried out his threat and yesterday filed suit in Tel Aviv District Court against Israeli rating company Standard and Poor's Maalot, as well as S&P itself, after the Israeli firm lowered the credit rating of Steinmetz's TMI.

The suit accused Maalot of "twisted and zigzagging" behavior, saying the company actions were embarrassing.

The court was asked to rule that Maalot's decision to lower the rating of TMI's bonds from A to CCC, then to D and then to raise them back to CCC was invalid and could not be relied on. Alternatively, TMI asked the court to suspend the rating change until a reappraisal of the company's situation.

TMI also wants the court to rule that S&P is not authorized to rate TMI's bonds, since it is not party to TMI's contract with Maalot and S&P has no license to issue such ratings.

"We have still not received the suit, and when we receive it we will respond appropriately," S&P Maalot said. "S&P Maalot was approved as a ratings agency in Israel according to the regulations."