Daily Roundup / Bank Mizrahi Calling in Office Depot Debt

Leumi says the financial forecast in Tel Aviv is sunny, while the Ratio Oil & Gas Exploration partnership is drilling for $30 million.

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Time to write off Office Depot? Bank Mizrahi-Tefahot on Thursday filed to liquidate Office Depot once and for all, though ostensibly parent company Hamashbir Lazarchan was to sell it to a group of Haredi investors in New York. What went wrong? A source close to Hamashbir says the reason is Mizrahi couldn't reach an accord with the would-be buyers over NIS 30 million that Office Depot owes the bank. Sources at Mizrahi claim the investors, who had agreed to pay NIS 30 million for Office Depot, had backed out of the acquisition. "Mizrahi-Tefahot had been patiently waiting for the deal to be completed but unhappily, when it turned out that the sale wouldn't go through, there were no choices left but to call in the loan and sue for liquidation," said the source at the bank.

Leumi predicts cheery week in Tel Aviv: While American investors tremble before the specter of the fiscal cliff, Bank Leumi predicts Israel's investment pack should be feeling chirpy this week. Why do Leumi's analysts think Israeli sentiment is on the upswing? Because the security situation has eased, elections are nearing, there seems to be an uptick in optimism regarding the challenges that the global economy faces and year-end is approaching, "explains" the bank. It is true that toward year-end investment managers tend to do all they can to pretty up portfolios. All that said, the bank is predicting relatively weak fourth-quarter statements from Israel's companies, in part based on indicators showing that Israeli manufacturing has been slowing. The Leumi analysts also point out that Israeli bank stocks gained 49% inside four months, mainly, they think, because the starting point was so low – not because investors think the banks did particularly well. "In the quarters to come the banks will have to deal with slowing economic growth, which will directly impact their results," the Leumi analysts write.

Midroog downgrades Beinleumi's outlook: Credit rating agency Midroog on Thursday downgraded its outlook for the First International Bank of Israel, locally known as Beinleumi, from Stable to Negative, though it left the bank's credit rating unchanged for the nonce. The bank's ability to absorb losses is limited: The stability of its profitability is not great compared with its peer group, its costs structure is rigid and it has limited operational flexibility, says Midroog. And the business environment is challenging, the agency adds.

Ratio raising NIS 30 million: The Ratio Oil & Gas Exploration partnership will be raising NIS 30 million in an issue of participation units and warrants some time during the weeks to come, in order to cover its financing needs in 2013. Yes, it's supposed to get some half-billion shekels from Woodside Petroleum of Australia for 5% of the deep-water Leviathan prospect, but that's not money in hand yet. During 2013, Ratio and its partners in Leviathan, Israel's Delek Group and Noble Energy of Texas, will be carrying out additional drills at Leviathan, looking for oil this time, not gas, and that's before Woodside comes on board. Note that the units offering will slightly dilute stakeholders who decline to participate in the offering.

S&P smiles on Teva notes: Standard & Poor's on Thursday gave an A-minus corporate credit rating to Teva Pharmaceutical Industries' upcoming offering of senior, unsecured long-term notes maturing in 2022. The proceeds will be used to refinance existing debt, not affecting credit protection measures, said S&P. Moreover it lengthens the duration of the company's debt, which lead the agency's analysts to upgrade its liquidity assessment for Teva to Strong.

Insurer eyeing Melisron malls: The Harel insurance group is negotiating to buy two malls from Melisron for about a billion shekels, shortly after ending talks to buy 50% of the Ir Yamim mall in Eilat from Azorim over the asking price. The properties in question are the Renanim center in Ra'anana and the Savyonim mall in Yehud. Reportedly the Gazit Globe group might buy stakes in either or both of the two malls as well. In any case, decisions can't tarry. Melisron has until year-end 2012 to sell the malls as part of the antitrust preconditions for buying the real estate company British-Israel in 2011. Melisron, which belongs to the Ofer family, is asking the Antitrust Authority for an extension.

With reporting by Adi Dovrat-Meseritz, Hila Raz, Eran Azran, Michael Rochvarger, Dror Raich and Reuters

Are Office Depot investors looking for the bin?Credit: Bloomberg

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