Israeli Supermarket Chain Super-Sol Expected to Raise NIS 5b in Bonds

Unsecured bonds will be issued in two series, with a variety of conditions that could trigger immediate redemption.

Super-Sol, the supermarket chain owned by Israel’s financially troubled IDB holding group, will seek to raise NIS 5 billion in newly issued bonds.

The company’s board recently authorized the sale of two new series of bonds. While the actual sum to be raised has not been officially decided, company financial documents have revealed that each bond series is expected to raise NIS 2.5 billion each, for a total of NIS 5 billion.

The bonds will not be secured by any collateral but will include restrictive conditions based on the investment prospectus made public by the company. The bonds’ covenants will require, among other things, that Super-Sol’s shareholder capital does not fall below NIS 400 million for two or more consecutive quarters. Likewise, the company may not issue dividends to shareholders, or carry out stock buyback operations if such a move would reduce its shareholder capital to less than NIS 600 million.

The covenants will also contain clauses triggering the immediate early redemption of the bonds. Super-Sol itself will have the right to redeem the bonds early. However, investors will also be able to force an immediate redemption of the bonds if business conditions deteriorate to the extent that repayment is felt to be endangered. The number of events listed as letting investors call for immediate bond redemption include, among others, a company merger or asset sell-off conducted without bondholders’ approval and failure to issue financial reports in a timely fashion.

Dan Keinan