Business in Brief: Creditors Seek More Collateral From Arison as Housing & Construction Shares Sink

Overseas companies boost Tel Aviv fundraising 12% in first quarter ■ Investors wary of debt impact arising from IDB’s Spacecom offer ■ Shares post modest losses as Wall Street bounces back

FILE PHOTO: From left: Lilach Asher-Topilsky, Shari Arison and Efrat Peled at an art exhibition, February 2, 2014.
Nir Kedar

Arison Holdings, the investment vehicle of billionaire heiress Shari Arison, is in talks with creditors about increasing collateral by some 200 million shekels ($56.7 million) or face a costly downgrade to its A-plus credit rating. The source of the holding company’s troubles is its Housing & Construction Limited unit, whose share price has plunged 41% since police opened an investigation into allegations that company bribed African officials to win contracts. Arison Holdings has 600 million shekels in loans outstanding to a consortium of lenders and has pledged 35% of Housing & Construction shares as collateral. The lenders, which include Mizrahi Tefahot Bank, want Arison Holdings to either strengthen existing collateral or get a cash injection, or for Arison herself to provide personal guarantees. Each notch lower in its rating adds 50 basis points to the annual interest rates it pays on the debt, which now range between 3% and 5%. (Yoram Gabison and Michael Rochvarger)   

Overseas companies boost Tel Aviv fundraising 12% in first quarter

Overseas companies kept the local market for new securities issues afloat in the first quarter, with 11 companies raising a combined 3.3 billion shekels ($940 million), an increase of 12% from a year earlier. All told, companies raised 20.6 billion shekels on the Tel Aviv Stock Exchange in the first three months of the year, down 9% from a year earlier. Some 96% of the fundraising was for debt, with just three initial public offerings during the quarter, that raised a combined 612 million shekels. They included Fattal Hotels, Roni Zim Shopping Centers and Akida. There was another 220 million shekels in secondary equity offerings as well. What emerges from the first-quarter figures is that the public prefers to invest its money in foreign and property companies rather than in industry or technology, even though the latter two are bigger drivers of the economy. Property companies accounted for 60% of all fundraising, with energy-exploration companies coming in at No. 2 with 13.4%. (Eran Azran)

Investors wary of debt impact arising from IDB’s Spacecom offer

Eduardo Elsztain told investors a week ago at his IDB group’s annual investors conference that IDB was becoming active in business again after years of grappling with debt. But shares of its key publicly traded company, Discount Investment Corporation, have continued their downward trajectory. Dorin Zelnir-Palas, chief of research at IBI Investment House, said on Tuesday the reason is Discount’s offer a week ago to buy a 55% controlling stake in Spacecom, the operator of the Amos satellites. The offer would cost Discount Investment 375 million shekels ($106.3 million) at a time when the company has just 1.7 billion shekels in cash against 5 billion in debt, of which 1.1 billion is due by the end of 2019. “Discount’s acquisition of Spacecom is negative from a debt perspective, and it seems that’s what dragging Discount shares and bonds down,” she said in a note. Discount shares ended up 1.6% to 9.68 shekels on Tuesday after four days of declines. (Michael Rochvarger)

Shares post modest losses as Wall Street bounces back

Tel Aviv shares ended off their lows on Tuesday as Wall Street bounded back from its blowout the day before. Turnover was a relatively heavy 551 million shekels ($156 million), despite the shortened Passover-holiday session as the benchmark TA-35 index fell 0.56% to close at 1,423.86 points and the TA-125 lost 0.7% to 1,298.88. Tech indices led the declines, but the drop was restrained. Elbit Systems lost 1.9% to 419.70 shekels and Opko Health shed 2% to 10.65, but Ormat Technologies gained 1.6% to 198.80 and Kamada added 1.5% to 16.13. Shares controlled by Shaul Elovitch extended their losses, with Bezeq sliding 1.4% to 4.29 and Enlight losing 3.8% to 1.65. Banks were the only sector to end higher, with Hapoalim pacing the gains on an 0.75% rise to 24.19. In foreign currency trading, the dollar strengthened 0.1% to a representative rate of 3.5180 shekels after a long holiday break. The euro advanced 0.15% to 4.3354. (TheMarker Staff)