In an out of court settlement with its bondholder Euro Globe Company consented to the liquidation of its real estate assets in Germany. Euro Globe which is controlled by A. Levy Investments and Construction, Ltd. (of Israel) was founded in April 2006 for the specific purpose of raising funds for investment in the purchase and development of real estate in Western Europe.
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Between 2006-2008 the company acquired a number of real estate properties in Germany. Currently, the company holds five real estate assets in that country, it had purchased for a total of €90 million. The banking system provided 70 percent of the financing for these acquisitions while publicly issued bonds provided 26 percent of the funding. The company’s own equity accounted for merely 4 percent of the investment.
In April this year Euro Globe informed its bondholders that it has no independent sources for the payment of the balance it is required to make by the terms of the issuance of the bonds, payment that was due onApril 30 this year and, just prior to the due date, it asked their approval for a postponement of the payment.
The bondholders decided to go to court and exercise a lien they have on the shares of Euro Globe, which are held by its parent company, the aforementioned A. Levy Investments and Construction.
The bondholders claim that Euro Globe owes them, as the date of filing the complaint, a total of NIS34 million (about €7, 061, 853 or $9, 405, 255 at current rates) and that Euro Globe refuses to execute a transaction through which it could liquidate its equity in its properties in Germany, despite the fact that these assets are in the process of being realized by a foreign bank (the Scottish bank RBS that provided the company a loan of over 26 million against hypothecation of the properties in its favor) and despite the fact that the realization of these assets is the only chance the company has to extract some monetary value from them.
According to the bondholders they were supposed to receive from the sale of the company’s assets in Germany about €1.8 million. The bondholders argued that the realization of assets in Germany is the only way to protect at least a fraction of their financial rights in the foreseeable future.
The parties have recently informed the court that the settlement agreement reached by them will result in liquidation of the company’s assets in Germany but that it would take place only when a potential buyer would appear, one who would offer the most serious deal for the highest value.