Management Helps Self to NIS 20 Million in Salary While Olimpia Bondholders Worry

Olympia saw profit hit by a double whammy: falling revenues coupled with increased financing costs. Profit at the real estate developer, which operates mostly in Eastern Europe, fell from NIS 305 million in 2007 to NIS 68 million in 2008.

The four owners, who are also Olimpia's managers, may feel the company is not doing that badly. Chairman Oscar Katzenelson, deputy chairman Alex Gore, CEO Joseph Barr and co-CEO Haim Guterman each cost the company NIS 5 million last year in wage costs.

Meanwhile, bondholders fear they may never see their money. Their suspicions are reflected in the prices of the firm's two bond series, which are trading at 55% and 65% yields.

The company had NIS 87 million in cash at the end of 2008, but is scheduled to pay off NIS 41 million in bonds and NIS 134 million in bank loans. Olimpia's management says it does not expect any liquidity problem, but ratings agency Midroog, which has rated Olimpia's bonds, cut the company's rating in December to Baa2 with a negative outlook, due to a heavy bond repayment schedule in 2010, the high exposure to Eastern Europe and a slowdown in certain areas of its business.