The Ticker

Africa Israel Bailout Imperiled as Taxman Demands Big Payment

Medley Capital of U.S. issues bonds in Tel Aviv; BioCanCell raises $25 million; Chiron Refineries enters cryptocurrency business; stocks edge up

Daniel Bar-On

Africa Israel Investments, the indebted property development company, was hit with a 245-million-shekel ($71.8 million) bill Tuesday by the tax authorities, who added to the pain by saying they wouldn’t let the company recognize for tax purposes 600 million shekels of accumulated losses. The sudden decision throws into doubt an offer by Moti Ben-Moshe to bail out and take control of the company, something that was due to be approved by Africa’s bondholders shortly. Unless the Israel Tax Authority changes its mind, something Ben-Moshe had been seeking to achieve in recent weeks, the bailout will collapse and the company will be put into liquidation. “This isn’t the first time that the tax authority has appeared at the last minute a debt agreement is being approved and has tried to extort money,” a source close to the company told TheMarker. “Suddenly the tax authority shows up and demands a payment.” Africa Israel shares ended down 1% at 20 agorot. (Shelly Appelberg)

Medley Capital of U.S. issues bonds in Tel Aviv, plans to list shares
Medley Capital Corporation, a U.S.-based nonbank lender to corporate borrowers, completed the institutional tranche of a bond issue on the Tel Aviv Stock Exchange on Tuesday and said it plans to list its shares there as well. The company raised 380 million shekels ($111.3 million) in the institutional tranche against orders of 640 million, at an interest rate of 5.05%, well under the maximum 5.5% underwriters had set. Medley expects to raise another 70 million in the public tranche in the next few days, bringing the total issue to 450 million, versus the 280 million it had originally planned on. Proceeds from the bonds, which carry no collateral, will be sued to repay higher-interest debt in the United States. Medley, which trades on the New York Stock Exchange, is the second nonbank finance company to sell bonds in Tel Aviv after PennantPark raised 490 million shekels in November. Others are expected to follow. (Michael Rochvarger)

BioCanCell raises $25 million in private placement ahead of U.S. IPO
BioCanCell said Tuesday it had signed a term sheet with an unnamed investment fund to raise $25 million via a private placement ahead of plans to go public on Wall Street this year. The fund will buy at least $7 million of stock, other investors it is expected to enlist will buy at least $8 million, and existing shareholders will buy at least $5 million at 1.60 shekels (47 cents) a share, a 14% a premium to the market price, BioCanCell said. The placement will give holders of the new shares a combined 36% stake in the company as well as warrants entitling them to buy more shares, equal to 80% of what they are acquiring now, at a 20% premium to the price in the current placement. The company said it would use the new money to fund further clinical trials of its lead drug BC-819 to treat non-muscle-invasive bladder cancer . Shares of BioCanCell, a unit of Clal Biotechnology, finished 12.9% higher at 1.58 shekels. (Yoram Gabison)

Chiron shares surge on move into cryptocurrency business
Shares of Chiron Refineries, which operates in Asia and West Africa, soared Tuesday after the company announced it was moving into the cryptocurrency business. Chiron, which had a market value of just 15.7 million shekels ($4.6 million) before Tuesday’s rally, said its directors had approved plans to enter to enter the cryptocurrency-access business by buying exclusive rights to technology developed by Virtual Crypto Technologies for buying and selling cryptocurrencies online or through ATMs. “The company plans to interface with casinos in northern Cyprus, where there is a very strong market, and the plan is to sell the software only, not to sell or trade in bitcoin,” Eitan Shmueli, Chiron’s attorney, told TheMarker. Shares of Chiron, which joins a clutch of other Tel Aviv-traded companies whose share price took off after announcing moves into the bitcoin business, ended 56.4% higher at 1.09 shekels. (Shelly Appelberg)

Tel Aviv shares inch up as banks dip
Tel Aviv shares edged up Tuesday, with all sectors showing gains apart from banks. The benchmark TA-35 index rose 0.1% to close at 1,533.68, while the TA-125 advanced 0.2% to 1,397.69, on turnover of 1.32 billion shekels ($390 million). Biomed shares led the gains, with Opko Health adding 5% to 15.56 shekels, Mazor Robotics 3.6% to 106.50 and Perrigo 1.1% to 319.40. Bezeq group shares ended sharply lower for a second day in a row: Bezeq itself lost 1% to 5.63, Internet Gold 1.8% to 34.14 and B Communications 2% to 69.60. Discount Investment Corp. closed 2.35% higher at 14.35 after Eran Jacoby of Rosario Capital said the shares could reach between 18,.70 and 20.50 shekels, citing the company’s quality assets. Volume leader Teva Pharmaceutical Industries inched up 0.1% to 70.99. Patent expiries and more widespread usage will fuel expected low-to-mid single digit net sales growth in Europe’s generic drug market into 2020, Moody’s Investors Service said, citing Teva as a chief beneficiary. (Shelly Appelberg and Guy Erez)