Elbit Imaging Debt Plan Passes Vote

Bondholders approve despite having to waive future claims; major creditor Bank Hapoalim not on board.

Elbit Imaging bondholders approved a debt-rescheduling plan last Thursday, the company has announced. The plan, which still requires court approval, got the nod from bondholders, despite the fact that it included a waiver of future claims and did not receive the support of major creditor Bank Hapoalim.

The plan provides that if an agreement is not reached with Bank Hapoalim by October 15, unsecured creditors will have the right to rescind it. Bank Hapoalim has a total of NIS 1.3 billion in exposure from the combined debt of the company and controlling shareholder Motti Zisser personally.

According to a company statement, the latest plan garnered the support of voters representing 91% of the outstanding Series Aleph to Zayin and Series 1 bonds. The company called it "a vote of confidence and sweeping support" for its plan, and an "additional substantial step" on the road to completing efforts to reschedule the firm's debt.

The company, which is involved in real-estate ventures, medical industries and retailing, owes bondholders a total of NIS 2.45 billion. It owes about NIS 300 million to Bank Hapoalim, including debt owned in connection with hotels in Belgium, and NIS 47 million to Bank Leumi. The company's financial plight is such that it could not meet its obligations absent a rescheduling plan.

The latest plan calls for NIS 666 million in bonds to remain outstanding, and the write-off of NIS 1.8 billion of the company's obligations. American hedge funds DK Partners and York Capital, which are owed about 35% of the debt, are to get 95% of the company's shares under the plan, leaving current shareholders with 5%.

Zisser's own stock in the company is to be transferred to Bank Hapoalim.

Zisser is still technically subject to being sued personally, but Elbit is to indemnify him for claims up to $60 million, at the expense of bondholders.

Bank Hapoalim, which has a 29% secured interest in Elbit Imaging subsidiary Plaza Centers, is demanding improved terms for itself through the receipt of additional shares at the bondholders' expense.

Dror Artzi