For the third time in seven years, Scorpio Real Estate, the property company controlled by Israeli billionaire Beny Steinmetz, is in financial trouble and has informed bondholders it won’t be able to repay them on time.
Holders of the Series Aleph bonds met on Tuesday at the offices of the trustee Hermetic Trust Services amid concerns Scorpio won’t be able to meet its obligations.
Under a debt arrangement with bondholders the company, which invests mainly in eastern and central Europe, the company was supposed to be redeemed 20 million shekels ($5.6 million) in debt by the end of the month.
Apart from problems at Scorpio, Steinmetz has been at the center of a criminal investigation on suspicions of paying bribes in the tens of millions of dollars to officials in Guinea to advance the business of his mining company, BSG Resources.
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In December 2016, he was detained by the Israel Police’s Lahav 433 unit and ordered to house arrest for two weeks. He was detained a second time in August 2017, along with four others, this time on related allegations of money laundering, falsifying documents, using fake documents, false registration of corporate documents, fraud, breach of corporate trust, obstruction of justice, and bribery. In March, his BSG was put into administration.
Scorpio signed its first bailout accord in March 2011, in which Steinmetz agreed to inject $100 million into the company in exchange for its debt being rescheduled. Steinmetz subsequently bought a third of the debt, leaving the amount owed by the company at 300 million shekels.
However, the agreement didn’t solve Scorpio’s problem and a second accord was reached in March 2016. Steinmetz agreed to redeem 168 million shekels of the debt and the bonds were delisted from Tel Aviv Stock Exchange trading.