Africa Israel asks court to approve sale of AFI stake to Leviev

Israeli property developer Africa Israel Investments and trustees of its bondholders have asked a court to approve a sale of the company’s holdings in hard-hit subsidiary AFI Development to Lev Leviev for NIS 550 million ($143m.).

Africa Israel, which is controlled by Leviev, is seeking a debt settlement with bondholders for the second time since 2010. It has NIS 3.1 billion in Israeli bonds to be repaid.

Russia-focused AFI has a market value of $85m.

As part of the proposal, bondholders would have the right to buy up to 10 percent of Leviev’s AFI stake, Africa Israel said on Tuesday.

London-listed AFI, which is 65% owned by Africa Israel, recorded a $32m. loss in the first quarter, and Russian bank VTB has called for early repayment of a $611m. loan to AFI Development for projects including the AFI Mall in Moscow.

AFI has until August 1 to repay its debt, make a swap transaction or face a loss of assets.

“This deal allows us to generate significant cash flow to the company that was not possible in a swap deal in which the lending bank would get the major assets in Russia, mainly AFI Mall,” Africa Israel chief executive Avraham Novogrocki said. “We intend to continue to work with representatives to complete the debt settlement soon.”

If the transaction is completed, Africa Israel said it would record a loss of NIS 2.5b., while equity attributable to shareholders would fall by NIS 1.4b. (Reuters)