Shaya to Sell Companies

Michael Rochvarger – Haaretz

Could Shaya Boymelgreen give up control over Azorim? He very well may: The American-Israeli businessman is negotiating to sell his debt-laden holding company Boymelgreen Capital, which owns the controlling interest in Azorim.

Boymelgreen Capital, formerly known as Gambit Computer Communications, originally borrowed NIS 600 million from Bank Mizrahi-Tefahot to buy Azorim. The loan was secured by shares in Azorim. However, as the financial crisis spread to the real estate sector, the value of these shares plummeted. Mizrahi-Tefahot demanded that Boymelgreen Capital increase collateral by tens of millions of dollars. Advertisement

As far as is known, Boymelgreen Capital has been meeting its loan payments. But if the company’s business deteriorates any further, it may have trouble complying with its financial covenants.

Beyond the NIS 600 million owed to Mizrahi-Tefahot, Boymelgreen group companies owe NIS 1.8 billion to bondholders. Boymelgreen Capital itself owes NIS 400 million to bondholders and is scheduled to return NIS 50 million this year.

The yield on Boymelgreen Capital’s Series B1 bonds has skyrocketed to 1,000%, while the yield on the B2 series is at 240%. Both indicate solid confidence among investors that the company can’t meet its commitments. Azorim’s bonds are trading at yield levels of 25% to 35%, also attesting to investor disquiet.

Azorim had raised NIS 880 million from bondholders. Last week it repaid NIS 180 million to bondholders on schedule, and it doesn’t face any other major repayments this year.

Four years after making the leap from the American real estate market to the local scene, Boymelgreen is reportedly negotiating to sell the controlling interest in the parent company to a group of investors headed by Arie Kotler, owner or Arko Holdings.

Aside from Boymelgreen Capital, Boymelgreen owes the Moriah-Accor hotel chain and 50% of the Assouta Medical Center.

He bought the 64% controlling interest in Azorim in 2006 from Nochi Dankner’s IDB group, paying NIS 1.2 billion for the company. Since then, Azorim’s market cap has shrunk by 88%.

Mizrahi-Tefahot declined to comment for this report. No comment was available from Boymelgreen Capital as of press time.