Elbit Imaging Submits New Debt Plan

Elbit Imaging submits sweetened plan that calls for the write-off of NIS 1.8 billion.

Motti Zisser's holding company Elbit Imaging, which is engaged in a range of businesses, including real estate, retail and medical devices, submitted a debt rescheduling agreement to the Tel Aviv District Court on Wednesday calling for the write-off of NIS 1.8 billion in debt. The new plan does not bar claims against Zisser and would leave creditors with 95% of the company's shares, with current shareholders controlling the remaining 5%.

The proposal was developed following an additional round of consultations and a set of improved terms after District Court Judge Varda Alshech withheld her approval several weeks ago for a prior debt rescheduling plan that Elbit Imaging had submitted. The way was paved for the new plan after major institutional investors Clal Insurance, Meitav DS Investments and Analyst IMS Investment Management Services all withdrew objections to Elbit Imaging's plans. The new plan also has the support of two American hedge funds, York Capital and DK Partners, which are among Zisser's company's largest creditors. It is opposed, however, by Bank Hapoalim.

Elbit Imaging owes its bondholders about NIS 2.45 billion. It owes about NIS 300 million to Bank Hapoalim and another NIS 47 million to Bank Leumi. It is unable to meet its obligations absent a settlement agreement with its creditors. The revised proposal that the court received Wednesday would leave Elbit Imaging with NIS 666 million in outstanding bonds, which is NIS 95 million more than the prior proposal. The plan also calls, however, for NIS 1.8 billion of the company's liabilities to be wiped out.

Creditors are due to convene on September 30 to consider the new plan, which calls for the creation of two new bond series. The first for NIS 446 million would provide for principal to be paid four and a half years after its term begins to run, and with an inflation-linked annual interest rate of 6% payable twice a year. These bondholders would also have a secured interest in the assets of Elbit Imaging and its subsidiaries.

The second series would involve debt of NIS 218 million linked to inflation. The principal would come due after six and a half years. The bonds will have a yield of 6% payable at the company's option either annually or when the principal gets paid. This would allow payments to be deferred if necessary to avoid insolvency on the company's part, although deferral would result in ultimate payment of interest on the regular interest.

Maciej Zawadzki