After a year of fruitless talks over NIS 850 million in debt, Yossi Maiman handed over control of his Ampal-American Israel Corporation to the company's bondholders.
The announcement surprised both Ampal's management and the creditors committee that had been appointed by a U.S. court to represent the bondholders after it filed for bankruptcy protection. The two sides met on Monday in Tel Aviv for further debt talks.
Bondholders said yesterday they will now have to form a management group in coming days to supervise the assets bequeathed to them. They include the natural gas pipeline running across the Sinai Peninsula to Israel, an option for 25% of an ethanol project in Colombia, a 37% stake in the Lev Hamifratz shopping mall and Gadot Chemicals Tankers & Terminals.
It was the pipeline, Ampal's biggest and most important asset, that sunk the company after the fall of Egyptian President Hosni Mubarak in 2011. Egypt cut off gas supplies to Israel, first due to a spate of terror attacks on the installation and later by cancelling the contract outright last April.
But bondholders said the decision was inevitable. "Maiman decided to surrender control of Ampal a minute before the American court would have wrested control from him by force," said Ofer Shapira, an attorney representing bondholders.
Shapira had presented a petition to the court last Thursday to rescind a period of exclusivity that Maiman had over Ampal assets and, the lawyer said, the court would have almost certainly accepted it.
"Maiman's announcement is a sign of good will," Shapira said. "It's a pity that he didn't hand over the keys last August and save the investor public in Israel unnecessary complications in the United States, which entailed a lot of costs."
The loss of the pipeline revenue made it impossible for Ampal to service the NIS 850 million in debt it had with bondholders. The company tried to reach a settlement but failed repeatedly. In an earlier surprise move, Maiman turned to U.S. courts two and a half months ago to win Chapter 11 protection from credits. Ampal is a U.S.-registered company.
The court gave him three months to negotiate with bondholders while his assets were protected from creditors. But even with the bargaining chip in hand, Maiman failed to reach what he regarded as improved terms over what the two sides had discussed previously.
Those included a grace period of two years before repayments began, as well as a promise by bondholders not to launch personal lawsuits against Maiman in return for his injecting $6 million of his own capital into the company.
With a debt settlement not being supervised by an American court, bondholders' representatives decided to pursue one of two strategies - to either win better settlement terms or, failing that, to take control of Ampal.
Now, bondholders will appoint managers who will run the company in the interest of the public rather than the controlling shareholders, Meitav and Psagot, two of the biggest institutional bondholders, according to a statement. "We believe that the Israeli capital market should condemn the futile behavior of Yossi Maiman and his associates and not allow further incidents like this one," it said.
The pipeline, operated by Ampal's East Mediterranean Gas Company unit, could yields tens of millions of dollars in income from lawsuits the company has filed against the Egyptian government.