Ultimatum to answer: “Committed to injecting NIS 400 million in capital by tomorrow – otherwise the debt will be repaid immediately” – Capital Market

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Delek Group bond holders, to whom it owes NIS 6 billion, gear up in actions against the controlling shareholder, Yitzhak Tshuva. Representatives of the holders and trustees presented an ultimatum to Teshuva and the management of the Delek group, which they must commit to by issuing rights of 400 by tomorrow. NIS million for raising capital, otherwise the debt will be repaid immediately.

The rights issue should allowFuel group, Which is managed by the Wells era, to provide cash to enable it to repay some of its over-indebtedness – principal and interest payments in the amount of about NIS 9 billion in the years to come. Provision of debt for immediate repayment, insofar as it is decided, is a first step in insolvency proceedings, before going to court.

Tomorrow, Delek’s bondholders are expected to convene for a second creditors’ meeting via video call. That the previous meeting on Tuesday was rejected At the last moment, in the background of the contacts that the Delegation conducted with Teshuva, regarding the possibility of approving a significant fundraising for the group. Ahead of the meeting, the Holder’s Representative – including Shmuel Eshel of Menorah, June Minister of Harel and Ohad Sarid of Summits, represented by Attorney Raanan Clear and Alon Binyamini – added a new section to the issues on the agenda: “Debate on the Debt Holders for Immediate Repayment.”

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Holders are concerned that a “dragging” answer when it comes to the possibility of capital injection, much like the way it managed and dragged the institutional bodies in its previous debt settlement, into real estate fuel. Issuing rights does not bode well with an answer, as it is likely to dilute its share in a significant company It is estimated that Teshuva – which has a personal debt of NIS 1.5 billion to banks – will find it difficult to make a significant flow of capital, if any, so that its stake in the group is expected to fall from 61% to about 45%.

So far, Delek Group has published an outline for strengthening collateral, prepared by consulting company Giza Singer Ibn, which represents Delek in contacts with the delegation. The outline, which has not yet been approved by the Board of Directors, including a NIS 260 million rights issue, in two equal beats in 2020 and 2021. However, the offer seems low and, according to estimates, the fuel will not suffice to cope with the severe liquidity crisis. More significant capital injection will enable the continued existence of fuel as a solvent company – even at the cost of diluting the controlling shareholder.

“Delek needs urgent capital raising of at least NIS 500 million, and maybe even a billion shekels. Otherwise, she might earn some time, but in the end she will be arrested and a painful settlement,” noted a senior in the capital market last week, who knows the Delek Group’s operations and Tshuva Group.

Already on April 5, the bondholders sent Delek a first warning letter, before taking any action, which included two main requirements: the first: a request for a pledge of fuel not to dispose of assets. That is, a pledge that Delek will not pledge additional free assets to the banks in order not to be harmed The future solvency of the holders, and the second – the immediate injection of capital into fuel by Teshuva itself or by external investors, even at the dilution price of the controlling shareholder.

However, three weeks after the letter was sent, with the exception of Giza’s obscure and non-binding offer – a reply or a fuel group had not yet responded to the delegate’s requests and pledged to carry out a capital injection. This is while Delek continues to sell assets under pressure (Fire sale). Holders fear that the quick realizations will result in a significant loss of value that could be used in the future to repay the debt to the bondholders.

Furthermore, bond holders fear that Delek’s board members – which include Chairman Gabi Lest, Teshuva himself, Carmit Elroy (daughter of Teshuva), Avi Harel, Roni Milo, and external directors Judith Zeidenberg and Shimon Doron – may make decisions To favor the good of Teshuva, over the good of society. For this reason, the holders warned the officers of the company that they personally bear responsibility for the damage that would be caused if they refused to comply with the representative’s requests.

On Thursday, up to 8% in Delek Group’s securities were recorded, given the moderate recovery in oil prices. However, the group’s bonds are still trading at 42% -270% maturity yields, which embody the market valuation for future repayment. Drilling fuel – The Delek Group’s main asset – rose by about 4% on Thursday – but fell by about 60% in the last 12 months.