Tevel's Major Creditor, Leumi, Has No Plans to Forgive Debt'

Bank Leumi has no intention to cancel the debts owed by the cable company Tevel, the bank said yesterday.

Bank Leumi has no intention to cancel the debts owed by the cable company Tevel, the bank said yesterday.

"We have made it clear to Tevel's shareholders that we do not intend to forgive its debts," said Ehud Shapira, Leumi's senior deputy CEO who also heads its Corporate and International Banking Division and and is manager of credit risks. "We expect those owners who played an active role in the management of the company to assume responsibility."

Tevel's debt is NIS 2.3 billion, and Leumi, the company's largest creditor, is owed NIS 950 million.

Last week, the Tel Aviv District Court approved the cable company's request to protect it against creditors for two months. CPA Zvi Yochman is now running the company.

Discount Investments is obligated to continue investing in Tevel because of its high level of involvement in Tevel's management and its large holding - 48 percent - in the company, Shapira said.

Leumi is preparing for the possibility that a receiver might be appointed to Tevel. The bank believes the company can survive at its current revenue level provided that payments to vendors are halted. If Tevel cuts the cost of content and increases subscription fees, recovery will be easier, according to the bank.

The First International Bank (FIBI) is negotiating with Tevel shareholders - Discount Investments and UPC - over the possible injection by Discount Investments of $50 million into the company in return for a dilution of the 23 percent being held as a security by the bank against UPC's $50 million debt. This move would increase Discount Investments' holdings in Tevel. The companies and the bank are discussing the valuation at which the dilution is to be made.

In November 2000, UPC borrowed $50 million from Discount Investments for two years. As collateral, UPC put up 23 percent of Tevel's stock - about half of its holding. Discount Investments then decided to sell the debt to FIBI against a lien on the stock.

Discount Investments has already said it would be willing to invest more money in the subsidiary, but UPC refused to invest and be diluted at the same time. In UPC's 2001 financial reports, accountants said the company may not survive as a going concern.