Recanati: 'Buying Gmul Was the Worst Deal in My Life'

Leumi is demanding immediate repayment of NIS 5 million in loans.

Bank Leumi is demanding immediate repayment of NIS 5 million in loans extended to Gmul Investment, and immediate repayment of another NIS 5 million in credit extended to Gmul subsidiary, the Mirage Hotel in Eilat. Gmul is guarantor for the hotel's NIS 30 million debts to Leumi.

Leumi holds rights to Mirage's assets and advised Gmul that it intends to collect the debt offsetting the outstanding sum with deposits at the bank. Meanwhile it has restricted the accounts until the debt is repaid.

"The crisis on the markets has reshuffled the deck and altered many plans, including Gmul's," company chairman Leon Recanati said at the C1 bondholders' meeting. "At this point I can say that buying control of Gmul was the worst deal I have ever made in my long career, and I have lost more than any other Gmul share or bond investor. Under the current circumstances, as of now, I cannot invest any more in Gmul, but I hope that we can all work together to find a solution and reach a fair, mutually agreed-upon arrangement."

A group of investors he led bought control of Gmul for NIS 420 million in December 2007, based on a company value of NIS 600 million.

Recanati sounded surprised when Bank Hapoalim confiscated NIS 27 million deposited with the bank because the company was in violation of its loan terms. "This is not the behavior I would have expected from Bank Hapoalim," he said.

Gmul ended the third quarter of this year with a loss of NIS 77.3 million, and has accumulated losses of NIS 179.7 million since the beginning of the year. Its quartely report includes a "going concern" caveat, with liabilities in bonds and bank loans totaling about NIS 1 billion.