There is nothing that is safe to say. my personal feeling is that as things move, the stock price will
react. as assets are realized and debts reduced, so will the price go.
If Israel's economy goes into recession (personally I think it is closer than people realize), the NIS will
lose value. that would be good for Elbit (unfortunately - Israel is my home) as it would help revive the
tourism proposition in Israel and would help pay debts back (debts are in NIS, assets in Euro and Dollar).
I do not want to lead you on. there are risks here. I think they will do fine, but it is not a given. there are
multiple variables baing Plaza with its debts, the hotels with their non recourse, the medical part, the land
in Tiberias. this is a company with assets who are carrying debt and have excess equity value. the question
is will the market prices go with Elbit. so far so good, but you count your winnings on the way out of the
casino, not a minute before.
You are right on one thing - there is a lien on all assets of both Plaza and Elbit as far as paying
down the bonds before any dividend can go out (thank god for that - I prefer less debt before
people start playing games paying dividends that later become very expensive...).
You are talking about Plaza Centers. they have two groups of loans:
1. secured loans to banks (mortgages secured by operating malls - less than 70% average LTV).
these are secured and non recourse loans.
2. the bonds in Israel and Poland (over 1BN NIS) secured by the rest of the assets.
Needless to say the lower the Shekel, the better off PLaza is.
Interest expense = malls servicing their mortgage, bond interest is predicated on selling
Elbit has 200M NIS loan to Bank Hapohalim and appx 650M NIS due in about 5 years.
I am sure you know their assets very well, since you basically are saying they will not be able
to get enough money to pay down the debt... as far as paying the interest, Elbit has to pay the
interest on the one bond (appx 6.5% * 500M NIS) and the Hapohalim loan (which has a lower
interest rate than the bond, but has a yearly amortization of the loan itself).
What happens in reality is beyond my ability to predict. I am not as fortunate as you are to
believe I can predict with precision the future.
Thank you and you need to relax. no investment is worth the amounts of emotion and time
you are putting into it. live your life and let time deal with your investment here.
I am not able to predict, but I will give you my opinion:
1. The assets will be liquidated over the next 5 years (for the most part) in my opinion.
2. Liquidity events (asset sales and floating) will have an effect on the price.
3. Their debt is structured in a way that will give them 5 years before maturities.
4. Insightec already have some approvals for a few indications (mostly in Europe). finishing the
Essential Tremors phase 3 in 2015 will give them a huge amount of visibility. it is a relatively simple
and risk free (plus low cost compared to any operation) operation and there are many patients that
suffer from it. all indications (that I know of) look good (based on the fact York capital injected $37M
of fresh money) should look good for that.
Another thing to watch is Gamida Cell - if their phase 2 goes well (should know in 2015), Elbit will get
over $30M as a repayment of shareholder's loans from Elbit Medical (which will get 22% * $165M +
future royalties if everything goes well - if and if...).
Part of what will happen in 2015 (if both trials are ok) is that Elbit Tech will become a pure play on
Insightec (Novartis has the option to buy Gamida Cell) with potential upside of royalties. that could
be rolled into Insightec (owns 36% of it) and that could be floated as a company in which Elbit owns
36% * 85% = 30%. anyway, my gut feeling is telling me that the plan looks like that.
5. With an asset rich and cashflow poor company you need to wait for years. we are talking up to 5 years.
Lets hope for the best.
Insightec is a company that will just finish the trial at the end of 2015.
This is a marathon, not a sprint. you should have never went all in.
If you lost, cut some losses and leave some. always keep dry powder.
Temporary (hopefully) losses are much more tolerable when you do
not go all in. you are being thought an expensive, but very useful, lesson.
Part of what is going on (in my opinion) is the exit of the investors who
were creditors and do not believe in the company's assets. time will
tell and I hope that you next adventure will incorporate the lessons
from this one. leave some and cut your losses on some.
If you can not stand the heat, do not invest. this company is just a basket of assets. this is
not a real operating company. the right question is: are these assets worth more than
enterprise value. I believe the answer is a big yes and the Shekel movement could help
if it were to continue and persist until such time as assets are sold and bonds are paid.
The assets are still the same assets, the liabilities are the same. there is an issue with their stores that
represent Mango in Israel and someone else wants the license (which expires next year). I did not and do
not think that those stores were ever anything that makes sense to Elbit. if they could give the stores and
get compensated for the outstanding credit (part of the Bank Hapohalim loan to Elbit - I think to the tune
of 60M NIS) they will be better off.
When assets are being marked to market every quarter, you have noise. During the debt
restructuring Plaza marked things down like crazy. real numbers will be visible only when they
sell something. until then, everything is a guess. my guess is that the asset value in what is
left will end up being much larger than the debts.
It will take awhile to get those values exposed. I do not think DK would have gone also into the
equity (backstopping the rights offering) if they did not think the value was there.
What you have is the active malls at LTV of of less than 0.65 for the bank debt (and servicing them)
and you have the rest of the assets against the bonds. those assets include India, Casa Radio,
the Belgrade project etc.
Anyway, that is what Plaza is now. I am guessing that with a few partial exits (2015 - Riga and
maybe partners into Casa Radio and Belgrade + Chennai projects finally starting), they should
be able to reduce their bond debt by close to 50% and still be exposed to those projects with less
risk and reward.
You are something else. I thought I was the only one who
says things like that with a straight face to people (when
they deserve it...).
I think this might be a repeat (or maybe finally a close) of the deal from 2013.
I believe they also sold in Romania a piece of land (probably to the competitor who will build
a power center 50 meters away from there...) for 3.5M Euro (inline with book value after a write
down in 2012).
Anyway, lets hope Plaza is on its way to more substantial raising of liquidity / reducing bond
To all it may concern: prophecy was given to the fools after the second temple was destroyed...
All that I ever said over here is that I did as much homework as I could and it looks to me that the
combined value of those assets is much higher than the enterprise value of Elbit.
Would that gap disappear tomorrow? probably not. the assets are mostly not income bearing
in nature (lands - both directly and through Plaza, hotels which are servicing their own debt
but have large value surplus and Biotech companies who are very promising, but do not have
sales yet), but the debt does cost money.
I do believe that the value gap would be eventually narrowed, but when is a matter for prophecy and
I am not qualified for that subject.
I wish you all good luck and for the company to be able to gain liquidity sooner than later through
asset sales (hopefully at decent prices...).
Here is something to think about: usually in a case of debt restructuring (with a large loss for equity) there
will be a lot of selling pressure at the end of the year. in this case I think that during the debt conversion
(which was a taxable event in Israel) the tax loss or benefits were recognized, so the only thing that could
affect would be window dressing and some former bond holder who have not out yet got out.
In a sense I wish that the holding in Plaza would go to 40+%. Elbit needs to stop the silly consolidation of
the financial reports. why should it take two hours to figure out what is actually going on in Elbit?
Plaza needs to have a dominant activist investor in its equity. that is not what Elbit is. they need to try and
market their larger opportunities (mostly Casa radio and Belgrad) to outside large investors, remain with
a minority and pay part of their bonds. doing that would get cheaper financing for the projects.
Casa Radio has (so far) 130M Euros in it (for 75%). even if you go down to 25% and get the project moving,
you could probably get enough in cash (for the part of the ownership) to pay quite a bit of the bonds.
Finally the shekel is starting to move down. lets hope it continues and become a (very logical) trend.
I hope DK becomes the activist in Plaza that I believe is needed.
Than give back the money and keep it empty. either way,
unless a very compelling opportunity emerges by the end of
the year, the money should be given back.
In such a case the corporation still exist and so is most of the
money (which does belong to the shareholders and not to
If the balance sheet would have meant anything, the company would not have been where it is...
The assets have the same value as they did a few days ago (with the exception of gamida cell
and insightec who actually are worth more than a few weeks ago - they are now fully funded).
Plaza is a company with assets which are not liquid right now. any value is as good as any other
right now. if the Romania economy continues to do ok, the assets there (which are a key for
plaza) will command a better price.
I will try. the news are not frequent and it is like watching paint dry at times, but it is important to not lose
sight of the big picture. good luck to elbit and to us, its shareholders.
whoever you are, if you studied law I hope you go and demand
a refund of your tuition. half the truth is worse than a lie.
I do not know if you actually think this way. I hope you do not,
because I am actually scarred for you.