The Securities Authority raided the offices of Peled-Givony group member companies yesterday, putting a nail in the coffin of the collapsing group. Rafi Peled and Arieh Givony's publicly-traded companies have encountered severe financial difficulties, and the banks that financed their heavily-leveraged acquisitions have begun to seize assets. The companies' heavy losses and deficit in shareholders equity raise serious doubts regarding the stability of the two businessmen's entire tree of companies, created over the past year. Most companies in the group have yet to publish Q1 2002 financials, and trading in their shares has been suspended.
It now appears that the banks will begin managing the companies over the next few months, and that the group's management - former media darlings - will appear in Securities Authority interrogation rooms and courts. The capital market has already begun preparing for the Peled-Givony group's "day after."
Yesterday's announcements by the companies emphasized their dire situation. The controlling shareholder in Feuchtwanger Hayl announced that Israel Discount Bank and Israel Continental Bank are demanding repayment of NIS 68 million in loans. Feuchtwanger Investments also said public director Dan Michaeli resigned after serving just three weeks. Iscal announced that since it did not meet the terms of an agreement with Computer Direct to buy shares in Formula Systems (Nasdaq: FORTY), Computer Direct canceled the agreement and kept the NIS 8.8 million already paid.
According to Discount Bank's announcement, that if Hayl and its subsidiaries, including the Nof Carmel Hotel, do not repay the debt within ten days, it will take all available remedial measures, including seizing collateral such as Hayl's six-dunam plot in Tirat Hacarmel.
Hayl's problem with Continental Bank is even worse. The Bank Hapoalim group bank seeks repayment of NIS 57 million within three days before seizing assets, including Hayl's 36 percent stake in Feuchtwanger Investments as well as put options under which Givony's Mashav would pay NIS 50 million for the stake. Feuchtwanger's NIS 37 million market cap makes implementation of the put options likely.
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