Zeevi Defaults on $45M Due in Interest

Banks to rule on receiver for his Bezeq shares

Banks that extended credit to Gad Zeevi to buy Bezeq shares plan to appoint a receiver for those shares after he failed to meet the interest payment due on the loan. Zeevi acquired a 20 percent stake in the state telecommunications company from Cable & Wireless two years ago. A consortium of banks, including Hapoalim, Leumi, Israel Discount, United Mizrahi and Mercantile financed him for the acquisition to the tune of $630 million.

Zeevi was due to pay $45 million in interest yesterday but was unable to come up with it and asked for an extension of several days. The banks did not grant a formal extension but simply waited a few days to consider what action to take.

Zeevi is not expected to find the payment, leaving the banks no choice but to take legal steps that would allow them to trade in the shares. The banks involved are divided over what action to take - some want to act quickly to name a receiver, several others want to wait a few more days. But all the banks are aware they must coordinate their moves to maximize their return.

The shares themselves were collateral for the loan. In addition, Zeevi provided a bank guarantee from FIBI Switzerland, part of the Safra Group, of $150 million. The banks will initially cash in the guarantees as a first stage of trying to salvage the loan.