Banks Worried About Tiv Taam

Banks Hapoalim and Leumi have placed Tiv Taam Holdings on a credit watch, based on mounting concern about whether the company can repay loans these banks granted. The company's retail subsidiary Tiv Taam, which runs a chain of non-kosher supermarkets around Israel, has also been placed on the banks' credit watch list.

That said, Tiv Taam is servicing its debt properly, surmise industry sources.

As of the second quarter's end, Tiv Taam owed Israel's banks NIS 295 million, of which most - NIS 260 million - is short-term debt. Hapoalim and Leumi are owed about NIS 200 million.

Tiv Taam also owes bondholders about NIS 28 million. Its bonds are trading at junk level yields of 30%, indicating that the capital market is also worried that the company may default on debt.

From the year's start, Tiv Taam stock has lost nearly 40%, but from its peak in February 2007 it is down 80%. The group's market cap has sunk to a mere NIS 112 million. That's equivalent to just a third of its shareholders equity at the end of the first half, which was NIS 339 million.

That said, for the first half of 2008 Tiv Taam admitted to losing NIS 6 million, which was better than its loss in the same period of 2007 - but from the start of 2007, its aggregate loss has accrued to NIS 32 million.

The parent company Tiv Taam Holdings is controlled by Amit Berger (38%) and Kobi Tribitch (40.8%).