The private bond offering by Shlomo Eliahu through his privately-held Eliahu Issues (Eliahu Hanpakot) took place yesterday and generated lively demand. Eliahu ultimately raised NIS 1.3 billion at 3.85% annual interest, far below the maximum rate set for the offering. The offering was over-subscribed by NIS 2.2 billion.
Eliahu said that the high level of demand in the private offering represented an extremely strong vote of confidence by the capital market in the company and its direction. He said demand was received from the very largest players in the market.
Eliahu sought to raise NIS 1.3 billion to replace most of his bank credit, which as far as is known stands at NIS 1.7 billion, and which he has found difficulty in repaying on schedule. Most of the debt arises from the acquisition of Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) in 2012. This is Eliahu's first ever bond offering. The bond will not be marketable.
Eliahu's 68.5% stake in Migdal will be transferred to the special purpose company (Eliahu Issues) issuing the bond, from another company privately held by Eliahu. The bondholders will receive collateral in the form of a lien on 38.5% of the shares in Migdal, and a negative lien on the remaining 30%, meaning that Eliahu will not be able to mortgage those shares to a third party without the bondholders' approval.
Migdal currently has a market cap of NIS 3.75 billion after a 55% rise in its share price in the past year.
Published by Globes [online], Israel business news - www.globes-online.com - on September 18, 2017
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