Delek Glbl Share Discussion Threads

[kenny] 12/4/2011 08:15

Here is the link:

[grollfam] 12/4/2011 06:04

Thanks Kenny, informative...

Where is this article from??

[kenny] 11/4/2011 22:39

I have added some comments after this lenghty but very informative article:

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Bondholders sitting tight on Delek Real Estate 's pledges
By Lior Zeno

Once again it seems that Delek Real Estate has defused a powder keg and calmed its bondholders - at least for now. At a meeting Thursday of holders of the company's Series B5 debentures, everyone remained surprisingly composed regarding the firm's struggle to pay down its debts.

But not everyone was convinced things would turn out right. "I just want to send the company one message: The zero hour has arrived," said one frustrated investor to CEO Eran Meital as the meeting was winding down. "The company's value is nil and so is the value of its stock, the price of its long-term bonds are at a huge spread from the short-term, and investors are terribly anxious."
Delek Real Estate, controlled by Yitzhak Tshuva, needs to pay down NIS 3.5 billion in debt over the next few years, including about NIS 1 billion on Series B5, which begins maturing in 2013. The company has been avoiding default through its divestment strategy, but this hasn't kept the bond's yield from degenerating to 19% amid investor worries. The firm's next major challenge: Making a NIS 218 million payment to Series C3 and B4 bondholders on May 31.
In 2011 the company needs NIS 764 million for payment on bank loans, NIS 663 million to pay down short-term bonds and NIS 473 million to repay credit from associated companies. To accomplish this, Meital discussed a projected NIS 2 billion cash flow for the year resulting from the continued sell-off of assets and the issuing of securities. The company seeks to raise NIS 250 million by issuing secured bonds and NIS 90 million through a rights issue. It also hopes to raise NIS 330 million by spinning off Elad Israel Residence, possibly to Tshuva himself.

If everything goes as planned ...
If everything turns out as planned, Delek Real Estate will begin 2012 with NIS 175 million in cash and all its short-term obligations paid up. Plans for 2012 include another rights issue, bringing in NIS 150 million, and another issue of secured bonds for NIS 220 million, leaving the company with NIS 23 million in the kitty after making its payments on bank debts and short-term bonds for the year.

But that's what worries the investors holding NIS 1 billion in bonds who met on Thursday. If Delek Real Estate meets all its short-term obligations by selling off its assets over two years, what will be left for them?

Meital came to the meeting with two messages. First, he said the company is trying to minimize the damage brought on by the previous management; a highly-leveraged strategy dug the company into a deep hole. Quarterly losses are being gradually reduced - they amounted to NIS 120 million in the last quarter of 2010, Meital said, hinting that the losses will continue narrowing.
"We see a clear trend and it's not by chance," he said. "It's based on several factors expected to change the situation, significant factors that are already underway."

Three parameters should help the company over the coming years, he said, one being changes in British bank rates, expected to have a positive effect on the firm's derivative transactions. The recovery of real estate prices in markets where subsidiary Delek Global Real Estate is active and improving exchange rates for those countries are the other two parameters.

The second message is that Tshuva will continue standing behind the company and its debts even if he hasn't said this in so many words. "History proves that the controlling owner has provided the company with credit and guarantees and takes part in every rights issue," said Meital. He added that just the previous week Tshuva provided guarantees necessary for NIS 55 million in bank credit.

No future guarantees, but a track record
When attorney Guy Gissin, who once represented bondholders of Africa Israel's Series B9, asked if the company could commit to putting up available assets as security, Meital said that hardly any assets remain unfettered, save for a few that don't amount to much, and that most are held in lien to banks and related companies.
"The banks want the company to survive and have reached an understanding with us that the security/debt ratio is very low and can be raised, freeing up assets," he added. "After several conditions are met we can free up assets and raise capital."

One bondholder asked why an arrangement isn't being made. "The company has a certain approach and a controlling owner who supports the process and stands by the company," Meital said.
"On the other hand, we don't have any security to offer. I can't promise, but I am sure [Tshuva] is ready to help with the rights [issue]. I don't believe that we'll sit here in the next year or two and say 'sorry - it didn't work.' There are no guarantees for the future, but there is a track record from the past."
Published 00:54 11.04.11
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Note this paragraph:
"Three parameters should help the company over the coming years, he said, one being changes in British bank rates, expected to have a positive effect on the firm's derivative transactions. The recovery of real estate prices in markets where subsidiary Delek Global Real Estate is active and improving exchange rates for those countries are the other two parameters."

As I commented in earlier posts, there is a lot of "hidden value" in the swaps. In this article the company makes specific mention of that value. The rest of that paragraph also seems very encouraging.

In another part of the article, it mentions that some bonds redeem on 31 May, so I am guessing the first tranche of buy-back will have to occur before then.

[kenny] 05/4/2011 15:53

Well said tiltonboy and that C$60m is on top of the value I have called "hidden value" in relation to swaps and deferred tax.

[tiltonboy] 05/4/2011 12:47

Hebrew or not, but $290-300m sale price, and $60m profits comes through loud and clear.

[grollfam] 05/4/2011 11:30

ok, thanks, checked it out too, Israeli daily, hebrew only...thanks...

[kenny] 05/4/2011 11:09

I don't know which but I think Hebrew - a google translation. Agreed it is a poor translation but I think most online translators have trouble with Hebrew.

[grollfam] 05/4/2011 10:57

Kenny, from which newspaper did you glean these articles ???

Hebrew and/or French ?????? bad translations.......

[kenny] 05/4/2011 10:30

Translation of article is below:

Exclusive Calcalist: Delek Real Estate in the realization of the huge $ 300 million in Canada

The company received bids for the office building, "Bell Tower" in Montreal high $ 60 million value of the property listed in the books. Jeremy Naor, law of the controlling shareholder Yitzhak Tshuva, is expected to cut a coupon of 3.8 million dollars on the deal
Golan Hazani
27.03.11, 07:37 27.03.11, 07:37


Delek Real Estate is facing another big realization: Calcalist learned that in the coming days the company expects to sell the building, "Bell Tower" in Montreal on -290-300 million.
The company estimated the value of property in 230 million houses for the third quarter report of 2010, so that following the exercise is expected to record a capital gain of more than $ 60 million.
Bell Tower is an office building 28 floors whose area (excluding parking) is approximately 94 thousand square meters. 15 floors are rented telecom company Bell Canada. Five additional stories in this insurance company, floor and half is at the UN five and a half floors are rented out , as of September 2010.
Calcalist learned that some Canadian real estate funds and pension entities fuel approached real estate auction held by Royal Bank of Canada, the highest bids received for the property totaled approximately -297 and -294 million million Canadian dollars.
In the coming days you choose and Management of the EA canceled the offer which it is interested. Signing such deal is expected within a week, but will be quarterly payment

Second of 2011.
Jeremy Naor, law of the controlling fuel real estate, Yitzhak Tshuva, is expected to receive approximately $ 3.8 million following the sale of Bell Tower Building. Naor, who was drafted by the company last November to help her sale of assets in Canada, should have received 1.05 million (0.36 % of the sale of the property) and $ 2.7 million (4.5% of the difference between the consideration received and the company for which the value of the property listed in the library.) Shareholders of Delek Real Estate has confirmed the terms of the contract with enlightened in January.
Delek Real Estate is suffering a deficit of NIS 1.2 billion in equity, next year will be required to repay debts totaling about 2 billion. Exercise of property in Montreal is expected to help her in that.
Analyst Yuval Ben Zeev - earlier this month estimated that more likely the company will open negotiations for an agreement, which will be converted into shares a significant portion of its duties. The company denied that it intends to do so, it seems that managers indeed determined to exhaust every move to avoid a debt settlement.
The company announced in early March - the daughter of Delek Real Estate, DGRE, the realization of building Stoncater Court in London on -534 million.
Delek Real Estate is not given a response.

[tiltonboy] 03/4/2011 18:41

fp,

I've been bidding Jenkins for stock for months, but haven't picked any up.

[flying pig] 03/4/2011 14:33

Cheers Kenny
Any equity prices on the grey market available from forced selling?

[kenny] 03/4/2011 11:35

Accounts to 31.12.10 will be posted to shareholders in the next week or two. I received a copy by email today, following my earlier request.

NAV at 31.12.10 is 126p per share. Earnings before loss on asset value movements and swaps were £28.5m or 10.75p per share. Therefore, 10.75p is the annual dividend level we shareholders should expect subject to the effect of property sales and movement in interest rates on new loans taken out to replace expiring loans.

Agreement with bank to refinance Bell Tower which will release CAN$60m, about £38m, by 21 April on a six-month loan e.g. that money is not dependant on the sale of Bell Tower albeit in anticipation of the sale. Statement that the DGRE board has committed to use most of those funds for a share buy-back or dividend. That would be up to 14p per share dividend although it looks more likely to be used for a buy-back.

Balance sheet includes provision for swap liabilities of £208m and deferred tax of £119m. In the longer term, up to 100% of the swap liabilities may not be due. On deferred tax, I compute up to £88m of that may never be incurred.

However, using a conservative basis, if we assume that 50% of the swap liability is never payable and on deferred tax that only one half of the £88m is avoided, that gives total potential "hidden value" of £148m. That is 56p of additional value giving a prudent current valuation of 182p per share. Of course, in future, property values may continue to decline but I suggest that my conservative assumptions make allowance for that.

One could also take the view, that 182p is the future potential value and that figure should be discounted by some factor to arrive at current value, in other words, what a third party buyer would be willing to pay for 100% of DGRE as it stands today with all the future risks as well as the future upside. I suggest such a buyer would be willing to pay more than 126p per share; not least because of the return of 10.75p p.a. for so long as it takes to realise full value.

[kenny] 01/4/2011 08:27

Israelis restructure debt for £417m of UK Hiltons
01 April 2011 | By Mike Phillips

Ahouvi and Delek Global provide equity; Royal Bank of Scotland and Bank of Ireland write-off debt. Dealmakers: Ahouvi and Delek played a large part in debt-driven boom.

A consortium of Israeli investors that bought £417m of UK Hilton hotels has completed the restructuring of the debt that funded the purchase. A joint venture between Igal Ahouvi and Delek Global Real Estate has put new equity into the deal and part of the debt has been written down by a consortium of up to 10 lenders, among them the Royal Bank of Scotland and Bank of Ireland.
Banks are in the throes of restructuring billions of pounds of loans secured against hotel property that was bought at the height of the market in overleveraged deals. Delek and Ahouvi played a large part in the debt-driven boom.
They bought the 16-strong Hilton portfolio in 2005, of which the two largest properties were at Gatwick airport and Kingston. Delek owned 17% of the equity and Ahouvi provided the remainder.
The portfolio was bought using £358m of debt at an interest rate of 5.8%, which will mature in 2015. The drop in values following the boom has precipitated the need for a debt restructuring.
The total debt secured against the portfolio has been reduced from £358m to £292m. The owners put around £7m of new equity into the deal, and the banks took a writedown on their loans.
Delek had previously written down the value of its investment in the portfolio to zero, but the refinancing could result in a £4m valuation uplift. The restructuring follows a similar restructuring in February of a £1.1bn deal that Delek and Ahouvi undertook alongside Derek Quinlan to buy 47 Marriott hotels, when RBS and Lehman Brothers undertook a debt-for-equity swap.
That deal means RBS and Lehman will agree to write off around £50m of debt in exchange for a 25% stake in the equity of the portfolio. The other owners are also likely to put in equity and retain ownership stakes.
When the consortium bought the 47-hotel portfolio from RBS, Quinlan Private owned 44%, Ahouvi 39% and Delek Global Real Estate 17%. They invested a total of £220m of equity.
RBS provided an £850m loan to fund the transaction, which was then widely syndicated to different banks, among them Lehman Brothers. The facility matures in 2014 and has an interest rate of 6.16%. Five of the hotels were sold in 2007 for £50m, and the money used to pay down debt.
Other hotel deals in the offing are the sale of Mint Hotels, jointly owned by Lloyds Banking Group and the Orr family. JP Morgan Cazenove has been appointed to advise on a £550m sale.

[kenny] 30/3/2011 14:47

grollfam,

I have looked up the Spreadex holding and you are spot on!! The Speadex holding is exactly the same number of shares - 7,885,611 - as the number that Mr T acquired.

[grollfam] 30/3/2011 14:39

kenny,

If you see the undertaking given to vote 3% of the shares in favour of the scheme at 50p,if a 7p dividend was to be paid, Spreadex was named as the owner of the shares....They were the only 3% shareholder mentioned in the annual report, the only other large shareholder other than DRE being an Israeli Insurance company with about 7%......

I think buybacks will be closer to NAV, but lets wait for a material disposal....

[kenny] 30/3/2011 11:06

grollfam, having done some more research; you are right in that Mr T purchased his shares from a third party - how did you know it was Spreadex?

My apoligies to everyone for my mistake. This does change my views slightly and opens the door for the company to offer more than 65p per share.

[grollfam] 30/3/2011 09:12

kenny,Mr T bought his shares from Spreadex which was an independent shareholder at 65p....this is his 1st direct investment in DGRE...DRE alreafy owns 85% of DGRE...

[kenny] 29/3/2011 21:22

grollfam, Mr T bought the 3% from DRE - so a connected party transaction and no indication of market value.

[grollfam] 29/3/2011 19:06

guys, am on holiday in plettenberg bay so no response earlier......

Lets wait for the specific terms of the buy-backs before re-acting....

the 3% Tshuva bought at 65p was a seller wanting to sell for some time and set a base for the rest of the minorities.....

Once the bell tower building is sold, we will receive a large amount of nett cash into DGRE

[tiltonboy] 29/3/2011 16:25

Kenny,

The balance of the shares are held by me in Trust for the kids, which isn't so easy. I had a close shave a couple of years ago when I built up a stake in Voller Energy, who returned it's cash balances as a dividend (£29000 of it). Managed to get it into the missus name just in time.

[kenny] 29/3/2011 15:55

Dividends come with notional tax credit so there is only tax if in higher rate 40% or 50% - tiltonboy transfer all your shares to the wife.

Company should be exempt from CGT as it holds most if not all properties in individual channel island companies.

[flying pig] 29/3/2011 14:51

Tax issues - Both CO & holders -
Some in my SIPP but some PA - thus dividends marginal tax rate v CGT.
Co also needs care even in C Isles.

[tiltonboy] 29/3/2011 14:45

flying pig,

Tax at the company level, or tax at the individual's level?

Hopefully it will be a return of capital, and potentially subject to CGT. Receiving large dividends has been a bit of a nightmare, but thankfully part of my holding is in the wife's name, who has no other income.

[flying pig] 29/3/2011 14:27

chaps,

You are both right, but until we see some terms of a tender it is difficult to come to a conclusion.

Neither of you have mentioned tax, and this may also be a consideration for some people.

The good news is that some money should be coming our way.

[kenny] 29/3/2011 12:14

tiltonboy,

Good points which I agree with. I guess it is an easy decision if they offer in the region of 65p and a more difficult decision if the offer 100p or more. Re-investment comparisons at the time are also relevant - I have a small holding in MCKS!