After nearly half a century as a fixture on the Tel Aviv Stock Exchange, Africa Israel Investments was delisted this week, and has become a privately held company again.
At its peak, which was nearly 15 years ago, Africa Israel was a sprawling holding company with interests in real estate in Israel and abroad, construction, industry, a toll road, and even controlled the swimsuit maker Gottex. Its controlling shareholder, Lev Leviev, was among Israel’s most powerful and well-known tycoons, buying up assets with borrowed money.
The decline of its fortunes was a gradual thing.
Africa Israel was founded in the 1930s by South African Jews as a real estate company, following which it was acquired by Bank Leumi. It went public in 1973. Leviev, an immigrant from the former Soviet Union who made his first fortune in diamonds, bought the controlling interest in 1997.
The crisis arrives
Like many of Israel's tycoons and the holding companies they controlled, Africa Israel was slammed by the 2008 global financial crisis. The value of its properties in the United States, Eastern Europe and Russia plunged, and so did Africa Israel’s share price o the Tel Aviv Stock Exchange.
That led in 2009 to the first of two debt bailouts. Even though bondholders took a big haircut, Leviev succeeded in keeping control of his company. But Africa Israel again sank into financial difficulties in 2015 and this time he lost control of the company in a protracted debt-restructuring process.
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In the end, a much-diminished Africa Israel – its assets pared down to Africa Israel Residences, construction company Denya Cebus and land in the upscale town of Savyon – was sold in October to Lapidoth Capital, which is controlled by businessman Jacob Luxenburg.
The second bailout also left bondholders taking a big haircut, although how big it will be depends on the outcome of a lawsuit.
After 47 years, Africa Israel shares ceased trading Monday.
Lapidoth, backed by the institutional investment arm of investment house Altshuler Shacham, acquired Africa Israel in a hastily constructed offer, agreeing to pay 861.5 million shekels ($249 million) to bondholders plus another approximately 450 million shekels in cash the company held.
Lapidoth got assets worth 1.5 billion shekels at a steep discount, but bondholders got far less than the 3 billion shekels in debt Africa Israel carried with them.
The size of the haircut bondholders ultimately absorb awaits the resolution of a lawsuit by Israeli-German businessman Moti Ben-Moshe. Before Lapidoth entered the picture, Ben-Moshe had made an offer to buy Africa Israel in 2018, but the deal fell through amid disagreements with bondholders over terms and their refusal to refund him a 100-million-shekel deposit he had made with his bid.
Claiming the bondholders’ trustee, Hermetic Trust Services, acted in bad faith, Ben-Moshe is seeking 341 million shekels in damages. Meanwhile, Lapidoth is withholding 380 million shekels of the sum it paid.
Africa Israel will have an afterlife of sorts on the TASE as a unit of Lapidoth. Lapidoth trades on the stock exchange at a market cap of just over 1 billion shekels. Its interests include import rights to Samsung smartphones through its Sunny Communications unit as well as interests in drilling, energy and international trade.