Jerusalem Economy Corporation Rallies as Fishman, Leumi Reach Pact

Bank and tycoon agree to appoint special managers instead of receivers for his controlling stake.

Moti Milrod

Shares of the ailing property company Jerusalem Economy Corporation turned higher Tuesday after controlling shareholder Eliezer Fishman reached an agreement with Bank Leumi not to appoint a receiver for his JEC stock, and JEC’s CEO said the company remains solvent.

JEC shares closed up 8.4% to 6.63 shekels ($1.71) on the Tel Aviv Stock Exchange while its bonds rose as much as 8%, even though that still leaves them carrying double-digit yields.

Leumi and Fishman agreed late on Monday to name special managers for the stock that Fishman pledged as collateral against loans from the bank, amounting to a 40% stake in JEC. Earlier in the day Fishman had come out forcefully against appointing a receiver, saying it would reduce the value of the holding and create uncertainty.

JEC CEO David Zbeda told a meeting of nervous bondholders that the company could meet repayments and work aggressively to divest some 3.7 billion shekels of assets by the end of 2018, including a Canadian shopping mall it has failed several times in the past to sell.

Leumi petitioned the Tel Aviv District Court last Thursday to appoint a receiver over Fishman’s JEC shares as it seeks to recover as much as it can of hundreds of millions of shekels in delinquent debt. The bank acted after an agreement to sell the shares to a group led by the Nakash brothers of Jordache jeans fame fell through.

“It’s unfortunate that the Nakash-Ampa-Leumi deal was cancelled but Nakash-Ampa never signed anywhere — not with JEC and not with Leumi — to inject money into the company,” Zbeda told bondholders.

“We’re now working quickly to prevent any further deterioration in the company, which is in everyone’s interest. To anyone who is wondering, JEC has no black holes. The company’s financial reports are understandable, clear and transparent.”