Last-minute Loan Enables B. Yair to Pay Bondholders

Bank Leumi to provide NIS 20 million, enabling Biton vehicle to repay NIS 36 million next month.

Bank Leumi is bailing out B. Yair Building Corporation from temporary embarrassment: Leumi is lending B. Yair NIS 20 million so it can meet its NIS 36 million interest and principal payments to series B5 bondholders in eight to nine days.

In the coming year, B. Yair will need to pay back bondholders about NIS 150 million and banks NIS 360 million.

B. Yair develops, builds and sells property, mainly housing. It went public in June 2006 at a market cap of NIS 223 million. In the first half of 2007, its market cap peaked at nearly NIS 300 million, before plummeting to about NIS 14 million at the end of last year.

B. Yair's market cap currently is NIS 35 million, after the stock rose 90% this year.

The company's shareholder equity is about NIS 160 million, or about 10% of its balance sheet. B. Yair reported revenues of NIS 93 million for the first quarter of this year, down from NIS 113 million for the same period last year. Net profit remained unchanged at NIS 3 million.

But the company had a cash burn on current operations of NIS 18 million.

At the quarter's end, B. Yair had NIS 11.4 million in cash and equivalents.

B.Yair's first quarter financial report makes it clear that the upcoming bond repayment is conditioned on the company's ability to sell assets or borrow money. The report indicates the company has another NIS 226 million in unused bank credit for land acquisition. It used about NIS 150 million of its credit line to purchase the site of the former Foreign Ministry complex in Jerusalem.

In February, the banks extended the company's line of credit for another year. Sentiment at the company remains optimistic, noting in its first quarter financial report that B. Yair expects to meet its liabilities this year.

However, investors seem leery. B. Yair's bonds are trading at yields of 7.5% to 145%, the latter indicating very little faith among bondholders that they'll get their money back.

For bonds with principal and interest coming due at the end of June, yields are in the lower range. The series B2 bonds have the lowest yields, and are secured by a lien on the company's Neot Hapisgah shopping mall. The series B5 bonds are being traded at a yield of 23.4%, reflecting a degree of investor concern about the company's ability to repay its debt. This liability is secured by a first lien on the Metzudat Allenby assisted living facility in Jerusalem.

Bank Leumi stated that it doesn't comment on matters involving specific clients.