Delek Glbl Share Discussion Threads

[grollfam] 22/9/2011 14:28

KENNY

I would guess this would tie in with the undertakings given to certain bond holders in DRE to pay interest on certain classes of bonds, by not later than 31st December ...........

[kenny] 22/9/2011 12:06

Rather weird announcement out of DGRE today. Persumably to help those deciding whether or not to take up the 3rd tranche buyback:

22 September 2011

Delek Global Real Estate plc

("DGRE" or the "Company")


DGRE approval of a distribution to be made no later than 31 December 2011


The board of directors of the Company announces that earlier today it resolved that the distributions to its registered shareholders by the end of 2011 (either in a form of dividend or as consideration paid within a further tranche of share buyback) will be at a minimum of £4.5 million. It is noted that the aforementioned distribution is beyond the conditional third-tranche buyback announced on 19 September 2011. The dividend/price per share, record date and payment date of the said distribution/buyback will be determined and announced at a later stage (but in any event would take place not later than 31 December 2011).

[kenny] 20/9/2011 11:12

I think it is prudent to accept the 3rd buyback - as you say only for 9.9% of one's holding. DRE may not last much longer per this article out yesterday:


Published 05:22 19.09.11

The shekel drops / Why Delek Real Estate's bankers sleep well at night
But bondholder's still have plenty to worry about, even if they love taking big risks.
By Sivan Aizescu

The heads of the banks owed NIS 400 million by Delek Real Estate can sleep peacefully through the night, for all the company's sorry situation. In a conversation with TheMarker last week, one explained why: "Why should I worry about the state of Delek Real Estate when I have liens? I feel very comfortable."

These liens hadn't been in place all along. What happened is that as the company's situation deteriorated during the last three years, the banks demanded liens on more and more of its assets, as we learn from the company's financial statements over that period of time.

The banks demanded more and more collateral because they knew full well that one day, Delek Real Estate would default. Eyal Debi, analyst at the Bank Leumi brokerage department, wrote a paper in November 2008 about the company's prospects and predicted it would fail in 2011. The purpose of his paper was to help the brokerage department's clients reach decisions about investing in Delek Real Estate; but as is the way of dramatic statements like that, it found its way to the business press, which ran the story as the lead of the day.

Debi conducted the analysis together with analyst Alex Zabezhinsky, who has since left Leumi to become chief economist at DS Apex. Today, he explains that as far as Delek Real Estate's bondholders are concerned, the analysis is of secondary importance: What matters more is whether or not the company's owner, in this case, Yitzhak Tshuva, means to stand behind its liabilities.

"What about the bond yields? Do they compensate for the risk?" he asks; and answers: "That depends on your degree of risk aversion. Even though they're really high, you have to adore risk to buy Delek Real Estate bonds. Furthermore, you have to believe in the owners, and a little bit in the banks too."

Zombie companies

But while analysts chose to warn their clients what lay in store for Delek Real Estate, Ilik Rozanski, who had been Delek Real Estate's CEO back then, chose to lull them back to sleep. At the time Leumi released its paper, he commented in response: "I'm boiling mad at the banks and the analysts. I want to tell the paper's authors, Delek Real Estate won't go bankrupt."

He claimed they got a lot of things wrong and reached the wrong conclusion. Their calculation of the company's total income was too low and their estimate of costs was too high, Rozanski complained, adding, "We would be happy to provide the true figures."

With hindsight, the analysts had it right. The one who had it wrong was Rozanski.

And while Delek Real Estate's bondholders slept peacefully through their nights, the banks were taking action, gradually increasing their attachments on the company's assets.

We know how the story ends. Delek Real Estate is in the final throes before declaring bankruptcy. Its controlling shareholder hasn't declared that he will stand by the company's liabilities.

The real questions

The real questions are: Why did the bondholders wait three years. And why did they refuse to believe that the controlling shareholder would let the company default?

It happens again and again. Because the bondholders waited until the evil hour was practically upon them, meanwhile doing nothing, there's only one winner in this story - the banks.

Delek Real Estate isn't the only company in this unhappy state. There are others teetering on the brink of default, yet the bondholders snore on, taking no action to protect their rights, while the banks are negotiating furiously.

Yitzhak Tshuva's Delek Real Estate and Ilan Ben-Dov's Tao Tsuot are just two examples of zombie companies staggering on for about three years.

On the surface, they seemed to be functioning corporate entities, but they were breaking down from within.

The lesson for investors is that if they can smell a whiff of default in the air, they shouldn't dawdle while whimpering to the controlling shareholder and demanding securities. The bondholders have practically no leverage to demand anything from Tshuva or Ben-Dov at this stage. If they reject the debt arrangement proposals and demand the companies be liquidated, they'd be doing the controlling shareholders a big favor.

The bondholders need to take a lesson from the banks. When they see the risk factor rising, they need to demand collateral, not settle for empty promises.

This story is by: Sivan Aizescu
=========
Interesting because CIM might come back and buy from the banks after DRE goes down - CIM have done the due diligence so presumably know what to offer and how to structure the offer.

[tiltonboy] 19/9/2011 20:05

My fear is the forced sale of NCP and the unravelling of the swap.

As it is only for 10% of the holding, I might just take it.

[kenny] 19/9/2011 19:33

A very tricky decision; whether to accept 75p for about 9.9072% of current shareholding.

Figures seem to be - assume 75p is current value which could be correct as my 53p previous estimate assumed the second buyback cash lead to a NAV reduction on a pound for pound basis. Assume 116p for derivative financial provisions and 39p for deferred tax. Total of those provisions is 155p.

Longer term value:
– assume all those provisions do not crystalize, equals 230p per share.
-assume 50% of the provisions do not crystalize, equals 133p per share.

Taking the second more conservative assumption and discounting by 4% p.a. simple interest until 2017 gives current value of potentially about 101p.

Further, the longer term value of DGRE shares quoted above should be adjusted to add about 5p per share net rental income between now and 2017 – so 133p should perhaps be adjusted upwards by 30p; or rather 30p at its current value – assuming it accrues over the next 6 years. Also post the 3rd buyback the shares remaining in issue are enhanced by quite a few pence by the buyback itself.

The above figures are quite unrefined in terms of discounted cash flow and do assume that something has to happen in 2017, latest, when the NCP loans fall due for repayment.

Other points which may have a material bearing:
I feel all the deferred tax liability of 39p per share could be avoided. On the other hand, most of the derivate liability of 116p per share will not be avoided if there are forced sales following DRE going into receivership or being taken over by the bondholders, for example, whereas most of that liability may be avoided if the NCP portfolio is retained until 2017. I think that even if DRE goes down, the bondholders are unlikely to shoot themselves in the foot by forcing sales of the NCP portfolio – the portfolio is owned by various companies so much better to find a deep pocked buyer to purchase that sub-group intact with its current loans – may not need much of a cash injection to satisfy the banks and bring the interest down to its previous level. For a purchaser, it must be almost a guaranteed profit if they can re-finance in 2017 or sell in 2017 assuming the property values do not go down much more.

A difficult choice which I will have to mull over - all views and opinions would be welcomed as helpful to the decision making process.

[tiltonboy] 19/9/2011 15:33

This becomes the tricky one...at this price, to tender or not to tender.

If Kenny's assumptions on the value of the "swaps" is correct (no reason not to trust them), then it might be worth giving this tender a miss, and look at the longer term picture, and take an income stream.

Had it been 90p, I would most likely have taken it.

[grollfam] 19/9/2011 15:24

The board of directors of the Company (the "Board") announces that pursuant to an extraordinary general meeting ("EGM") of the Company held on 14 April 2011, by which the Company's shareholders (the "Shareholders") resolved to empower the Board to authorise the purchase by the Company of ordinary shares in its share capital under such general terms as further detailed within the letter from the chairman and the EGM notice dispatched to the Shareholders on 23 March 2011, the Board has resolved to purchase up to 17,333,333 ordinary shares in the share capital of the Company from its Shareholders equivalent to approximately 9.91% of the entire issued share capital of the Company at a price of £0.75 per ordinary share (the "Buyback"). The Buyback is conditional upon receipt of certain funds (the "Funds") by the Company no later than 6 October 2011 (or such later date to be notified by further announcement by the Company) so that if the Funds are not received by such date, the Buyback shall not be carried out.

Full details of the Buyback and the action requirements from the Shareholders may be found in the Buyback documentation dispatched to the Shareholders of the Company today.

[kenny] 16/9/2011 18:39

I thought the Canadian shopping centres had already been sold? In any event it needs to go to repay the debt - not all the recent new debt of $60m was repaid when the other canadian properties were sold. Therefore not too sure there will be any more money from canada to distribute. Don't know what it is in the books for - anyone else.

Post any refinancing, there will still be a need for dividends because CIM will still need funds to pay the rest of the bonds and recoup its investment. Does not look like the CIM deal with proceed albeit Mr T is in deep trouble if it does not.

As for further capital repayments, not too sure there is much more that can be sold that is lowly geared and that would produce a worthwhile pot of money.

[tiltonboy] 16/9/2011 14:57

Guys,

Sorry, but always the same question...what is it in the books at?

One other thought...If Delek do get re-financed, do you think the previous necessity for high dividends and capital repayments will now be shelved?

Thoughts appreciated.

[grollfam] 16/9/2011 14:41

Kenny,
DGRE had 45% of this deal, so could see free cash flow of 18 miilion Can Dollars.....

[grollfam] 16/9/2011 14:38

Homburg Canada REIT to acquire portfolio of 29 shopping centres anchored by Jean Coutu Group stores for $114.9 million
Non-strategic residential properties to be sold by the REIT in separate transaction for $64.85 million

MONTREAL, Sept. 16, 2011 /CNW Telbec/ - Homburg Canada Real Estate Investment Trust (TSX: HCR.UN) (the "REIT") announced today that it has entered into a binding agreement to acquire a 100 percent interest in a portfolio of 29 neighbourhood shopping centres, of which 24 are leased and anchored by the Jean Coutu Group. The gross purchase price for the portfolio is $114.9 million, excluding closing and transaction costs, representing a going-in capitalization rate of approximately 8.00%. The portfolio, which will be acquired from a group led by Delek Global Real Estate (DGRE), will add 728,000 square feet of retail space to the REIT's portfolio. The transaction is expected to close in late September, 2011.

"With this acquisition, the REIT continues to grow its retail footprint in Quebec and particularly in Montreal," said Jim Beckerleg, President and Chief Executive Officer. "This broad portfolio provides us with additional access to Jean Coutu Group and other high quality tenants, enabling us to further leverage our existing retail platforms in the Greater Montreal Area."

The portfolio is anchored by the Jean Coutu Group, which currently leases and anchors 24 of the portfolio's 29 properties, with their stores representing approximately 50 percent of the total portfolio's net income. The portfolio is further characterized by long-term leases and strong covenants with brand-name tenants such as IGA, METRO, a Canadian Schedule I Chartered Bank, Shoppers Drug Mart and Dollarama, which together represent 12% of the total square footage. The average remaining lease term for the Jean Coutu Group leases is 10.1 years, while the average remaining lease term for entire portfolio is 7.2 years. Twenty-six of the properties are in the province of Quebec, predominantly in the Montreal region; three properties are located in Ontario.

The $114.9 million purchase price of the portfolio will be settled by the assumption of $74.6 million in existing mortgages and by net equity of $40.3 million, which will be funded through cash on hand from the proceeds of the September 13, 2011 bought deal transaction and the REIT's existing line of credit.

The acquisition of the portfolio is subject to receipt of the formal consent of certain rating agencies under the existing mortgages registered on certain of the properties.

[grollfam] 12/9/2011 09:42

Delek, CIM talks extended by 30 days

During extension period, CIM fund won't gain exclusivity over negotiations as parties try to set new terms for acquisition of Delek Real Estate
Golan Hazani, Calcalist

After the surprising announcement regarding CIM's reluctance to go ahead with the acquisition of Delek Real Estate under the present terms of the agreement, Calcalist has learned that the two parties agreed on a 30-day extension for negotiations over the acquisition of Delek Real Estate.



During the extension period, CIM will not have exclusivity on the negotiations.



Until now, the fund negotiated with Yitzhak Yshuva on the terms under which negotiations would proceed; however, the fund made it clear that the deal could not go through without giving Delek Real Estate's bondholders a haircut or alternatively, Tshuva pouring copious funds into the company.




The deadline for Delek Real Estate's due diligence was Sunday. CIM's investigation of DGRE was comprehensive and encompassed all of DGRE's assets, which were examined by different evaluators in London and Israel.



Holders of DGRE's long-term bonds decided last week to put off the decision on the position of the bonds that are up for immediate payment until the 18th in order to exhaust all negotiations options vis-à-vis the DGRE and Tshuva's representatives

[kenny] 04/9/2011 15:43

Just received the interim accounts for DGRE for the six months to 30 June 2011 and they make pretty grim reading. NAV is down to 88p because of a further write down in the value of the NCP portfolio. Total write down of the NCP portfolio for the first six months is £157m.

The effect of the second buyback, which is not accounted for as at 30.06.11, could take the 30.09.11 NAV down as low as 53p. However, there is big hidden longer term value in two provisions on the balance sheet - the provision for derivative financial instruments is now worth 116p per share and the provision for deferred tax is worth a further 39p per share.

In summary, subject to further write downs in property values, NAV on the current issued share capital could be as low as 53p or as high as 208p per share.

If, in due course, we do get a buyout offer from DRE funded by its new owner CIM, assuming the transaction with CIM concludes, it is going to be a hard decision whether to accept – assuming it is going to be pitched quite low.

Never a dull moment holding shares in DGRE but I am going to stay for the ride – I note the debt on the NCP portfolio is due for repayment in 2017 so it is not too long before something has to be done with the car parks; one way or another. My other reason for staying in is that I anticipate that dividends from DGRE between now and 2017 are likely to be very good – could be anything from 5p per annum minimum to double that figure.

[grollfam] 29/8/2011 14:55

Tshuva's rescuers: Avi Shemesh, Shaul Kuba

Los Angeles real estate firm CIM, which specializes in developing derelict business centers, negotiating acquisition of Delek Real Estate
Golan Hazani, Liroy Peri

The US-based fund which is seeking an investment in Delek Real Estate and is negotiating over the control of the company with Yitzhak Tshuva is the CIM Group, owned by Israeli expatriates Avi Shemesh and Shaul Kuba, Calcalist has revealed.



Shemesh and Kuba founded the real estate investment fund in 1986 and it has since become one of the largest funds of its kind in Los Angeles, managing assets worth some $5 billion.



Conditions

Bondholders want guarantee from Tshuva / Golan Hazani, Calcalist

Delek Real Estate 25-Series bondholders decide to reject company's request to bondholders to appoint representatives to negotiate postponement of principle repayment
Full story



CIM Group specializes in financing and takeovers of companies in financial crisis. It conducts no business in Israel. A source on the real estate market that was connected to Shemesh and Kuba told Calcalist that "their financing has one of the highest interest rates on the market."



Privy to the connection between Delek Real Estate and the American fund are former head of the ISA corporate finance department Moshe Barkat, who is currently chairman of Delek Group's Phoenix Holdings, and head of ADO Shlomo Zohar.



Shlomo Zohar's involvement
At the end of 2010, CIM Fund signed a deal with Tamir Sapir's Sapir Group for the refunding of the Trump Tower in Soho in Manhattan. The $290 million funding was originally granted by ISTAR Bank and upon agreement with CIM, the bank debt was cut to $170 million.



The debt to ISTAR is first lien and was rescheduled for several years in return for higher interest rate. The debt to CIM is second lien and partners – the Sapir Group (60%) and the Trump Group (40%) have third claim on earnings from the project. Shlomo Zohar led his arrangement as well.



CIM specializes in giving abandoned business centers throughout the United States facelifts, redeveloping them into trendy residential and recreational areas. CIM has a diversified real estate portfolio which includes Investments in mid town Los Angeles, Hollywood, Las Vegas and a plethora of development projects throughout the US.



In the past CIM examined entering a partnership in the Herzliya Arena shopping mall owned by Moti Ziser but the deal did not come to fruition.



"It will be interesting to see them joining Delek Real Estate without giving bondholders a haircut. I doubt it can be done," a source acquainted with the two told Calcalist.



However, Delek Real Estate explicitly stated in the memorandum of understandings with CIM that the deal is contingent on full repayment of the principle and interest to the bondholders.




Two years ago, Kuba and Shamash gained unfavorable exposure due to an investigative report by the Los Angeles Times questioning the relationship between the two and the former Markstone Fund chairman Elliott Broidy who admitted to having taken a bribe.



Furthermore the article described the relationship between CIM and Los Angeles deputy mayor Alfred Villalobos who was one of the original founders of the fund, alleging that Hollywood-based CIM transferred $16 million to Villalobos to ensure investments in CIM's projects.



Two weeks ago, Delek Real Estate reported that it was holding talks for teaming up with a foreign investor the name of which it did not disclose. The investor was to pour some NIS 500 million ($138 million) into its cash box in return for the control over the company.



Under the deal's terms, Tshuva was to waive a NIS 120 million ($33 million) debt repayment and hand over control to the fund without compensation.



The parties signed a memorandum of agreements under which the acquirer will have a 60 day time-frame in which it would try to formulate an arrangement with Delek Real Estate's bondholders.




Tshuva left for New York last Wednesday to meet Shemesh and Kuba in an attempt to finalize the deal. He was joined Sunday night by his right hand man Idan Wallace and Delek Real Estate chief Eran Meital.



Estimates are that the deadline on the negotiations will be deferred by several days. Tshuva's group declined a response and refused to comment in any way on the identity of the prospective buyers.

[grollfam] 29/8/2011 07:54

CIM Group of US seen buying Delek Real Estate
The company is owned by Israeli expatriates Avi Shemesh and Shaul Kuba.
Globes' correspondent 29 Aug 11 09:46


Market sources believe that CIM Group Inc. is the US private that is buying Yitzhak Tshuva's 55% controlling interest in Delek Real Estate Ltd. (TASE: DLKR). CIM Group is owned by Israeli expatriates Avi Shemesh and Shaul Kuba.
Based in Los Angeles, CIM Group provides financing for and acquires for troubled real estate companies. It has more than $4 billion in assets under management.

CIM has committed to provide Delek Real Estate with a NIS 500 million loan, and Tshuva has promised a NIS 100 million personal loan. These loans will be subordinate to the company's other creditors.

Delek Real Estate was unavailable for comment.

Delek Real Estate's share price rose 4.1% at the opening today to NIS 0.23, giving a market cap of NIS 85 million.

Published by Globes [online], Israel business news - www.globes-online.com - on August 29, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

[grollfam] 14/8/2011 19:44

Agree Kenny, hopefully the 14 day due dillegence will be fine & the company will be recapitalized

[kenny] 14/8/2011 19:36

This must be good news for DGRE shareholders as it gives DRE the breathing space to explore all possibilities to maximise the remaining portfolio. I doubt the new owners of the majority of DRE would put up such large loans unless they were confident that there was value above simply getting their money back with interest.

Next move may be another offer to the minorites in DGRE, hopefully not a low offer as before. This time they cannot threaten us with delisting if we do not accept!!

[grollfam] 14/8/2011 11:23

Tshuva sells Delek Real Estate to US equity fund


Under the non-binding letter of intent, the US fund will provide Delek Real Estate with a NIS 500 million owners' loan.

14 August 11 12:56, Guy Katsovitch

Yitzhak Tshuva has sold his 50.79% controlling interest in Delek Real Estate Ltd. (TASE: DLKR) to a US equity fund for nothing. The US fund manages real estate properties worth $5 billion, but has no business operations in Israel.
Under the non-binding letter of intent, the US fund will provide Delek Real Estate with a NIS 500 million owners' loan, whose terms will be determined, but which will be subordinate to all of Delek Real Estate's bondholders. The US fund will also provide an additional NIS 100 million loan, which will also be subordinate to Delek Real Estate's bondholders.

Tshuva will transfer all his bonds, owners' loans and guarantees, amounting to NIS 120 million, to the buyer.

Last Thursday, Delek Real Estate announced that it would buy back NIS 20 million of its Series 1 bond, which are not traded on the Tel Aviv Stock Exchange (TASE), which will eliminate the need to make NIS 1.5 million in interest payments.

Delek Real Estate's Series 25 bondholders are meeting today in Ramat Gan. The outstanding debt on this bond is NIS 580 million. The principle is due for repayment in monthly installments through the end of 2012, and interest payments are made in March and September.

Delek Real Estate wants to postpone the principle payments on the Series 25 bond, giving the bondholders higher interest payments in exchange. The bondholders have already notified the company in writing that they will not accept postponement of the next principle payment. If they reject the postponement, the TASE will suspend trading in the bond on August 22.

Delek Real Estate owes its bondholders NIS 1.3 billion altogether.

Delek Real Estate's share price rose 9.5% to NIS 0.17, giving a market cap of NIS 61 million, before trading was suspended in the share ahead of the announcement.

Published by Globes [online], Israel business news - www.globes-online.com - on August 14, 2011

[grollfam] 14/8/2011 08:46

Delek Real Estate is suspended pending a material announcement

Hope they have sold 85% DGRE stake for a pound a share.......

[grollfam] 11/8/2011 14:07

Only 1 office block in Canada, which has equity of about 50 million Canadian Dollars & is 100% owned......

Then 57% of NCP portfolio, but problem with tenants who want rent reduction....

[tiltonboy] 11/8/2011 13:48

I know I have asked before, but what is left in the portfolio which is easily saleable, and might deliver another decent return of capital to shareholders

[grollfam] 11/8/2011 13:34

waiting for another sale of Canadian property & buyback of shares......

[tiltonboy] 11/8/2011 13:19

Keep em coming.