The saga of Africa-Israel’s financial woes, which started in late 2008, isn’t over yet. The company disclosed in its second-quarter report that it still faces over 2 billion shekels of debt, Globes reported.
Africa-Israel CEO Avraham Novogrocki admitted, “The company is burdened by a bond debt that requires payments of more than NIS 500 million a year, in addition to more than NIS 400 million in financing expenses.
“These are substantial amounts,” he said, “and we must work harder to meet them in the short and long term. We have the wherewithal to pay, but it’s not easy. We are dealing with this every day so that the bondholders receive what they are owed.”
According to the company’s latest financial report, it must repay NIS 1.14 billion in debt through June 2015, and NIS 1.1 billion in accumulated losses from January 2012 through June 2013.
To its credit, Africa-Israel has not been evading its responsibilities. Since the debt settlement went into effect in May 2010, it has met commitments to its bondholders in full.
Chairman Lev Leviev has injected some NIS 610 million out of the NIS 750 million he promised as part of the debt settlement.
IBI Investment House analyst Shai Azar is guardedly optimistic about Africa-Israel’s chances of making the repayments through the end of 2014.
Azar noted the company’s NIS 40 million from the dividend that construction subsidiary Danya Cebus has already announced; NIS 12 million from the sale of its stake in a Russian-language communications company; and NIS 180 million from the sale of properties in Los Angeles and Miami.
Crucial to its survival is the fate of the Ozerkovskaya office complex in Moscow. Africa-Israel’s Russian development arm AFI Development has completed its 50,000-square-meter project there, which should prove a valuable asset.
Azar predicts that AFI Development will sell Ozerkovskaya in 2014, which will yield a dividend of NIS 250 million to Africa-Israel. That in turn will enable it to meet its bond payments in full through 2014 and have a safety cushion for 2015.
But there are no guarantees for any of this.
“Africa-Israel’s ability to repay its debt in 2014 primarily depends on the sale of Ozerkovskaya,” says Azar. “If it does not sell, its wherewithal in 2014 is limited, and a problem could emerge in 2015.”