Shlomo Eliahu Joins List of Israeli Tycoons Seeking Debt Relief

The owner of the Migdal insurance group has begun talks on $260 million in debt.

Shlomo Eliahu.
Eyal Toueg

Shlomo Eliahu, who controls the Migdal Insurance group, is joining the list of tycoons seeking relief on his personal debt and has begun discussions with several banks about rescheduling his repayments.

Most of the 1 billion shekels ($260 million) owed to the banks is linked to his two closely held investment vehicles, Eliahu Insurance and Eliahu Holdings, whose debt he has personally guaranteed. About 400 million shekels of that is owed to Bank Leumi.

Eliahu’s finances are in better shape than that of other tycoons like Nochi Dankner and Eliezer Fishman because the value of his assets, with an estimated market value of 3 billion shekels, still exceeds his debt.

His holdings include a 69% stake in Migdal, 29% in Union Bank of Israel, and the real estate company that controls the Gan Ha’ir shopping mall in Tel Aviv. He also has interests in the Har Tzion Hotel in Jerusalem and luxury real estate projects in the capital.

But Eliahu faces a cash-flow problem. Regulators ordered Migdal to stop paying dividends, and his other assets do not generate enough cash to meet his repayment schedule. Migadal’s financial performance has deteriorated sharply and its market valuation has dropped 14% in the past year alone.

Sources close to the talks said the banks were likely to agree to reschedule payments as long as Eliahu agrees to offer more collateral and pay a higher rate of interest.