Israel Matzav

'Palestinian'-American businessman buys company developing 400-unit housing project in 'east' Jersualem

Control of Digal Investments, a Tel Aviv Stock Exchange-listed company that is promoting a luxurious, private Jewish neighborhood that is under construction next to the Arab neighborhood of Jebel Mukkabar in 'east' Jerusalem, has been sold to a 'Palestinian'-American businessman.

Digal Investment and Holdings Ltd. (TASE: DIGL) bondholders yesterday accepted an offer from a businessman represented by Adv. Dov Weissglass as the basis for a debt settlement by the company. Weissglass was the director of the Prime Minister's Bureau for Ariel Sharon and also served as chairman of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ).

Sources inform ''Globes'' that Weissglass is representing a Palestinian businessman who holds a US passport and who is behind Cypriot company Techsal Trading Ltd. The offer chosen by Digal's bondholder includes a NIS 36 million cash payment at NIS 0.60 per NIS 1 nominal value bond. The buyer plans to convert the bonds into shares and delist Digal from the TASE.

Digal is financially troubled and its market cap is just NIS 5.2 million. The company's flagship project is the 395-unit Nof Zion project under construction near the Armon Hanatziv promenade in eastern Jerusalem.

Digal, which has a shareholders' equity deficit of NIS 18 million, did not make a NIS 30 million payment to the bondholders. The company's total bond debt is NIS 60 million, and it owes Bank Leumi (TASE: LUMI) NIS 84 million.

Digal posted NIS 7 million revenue in the first half of 2010. Its loss rose to NIS 12 million in the first half after it lost NIS 17 million in 2009 as a whole. The company's auditors appended a going concern warning to the company's financial reports.

Digal is controlled by Meir Shamir through Mivtach Shamir Holdings Ltd. (TASE:MISH), with a 34.6% stake, and Yehuda Levy, with a 38.2% stake. Meir Shamir announced in August that he would transfer Mivtach Shamir's entire holding in Digal to its bondholders. The transfer has not yet taken place.

Digal's share price rose 5.5% in morning trading to NIS 0.73.

Nof Zion is a Jewish project. Much of it has been sold already and many people have moved in. There have been stories in the local media from time to time with complaints about unfulfilled promises. Many of the buyers are American investors, and some may not have known that they were buying so close to an Arab neighborhood. Hmmm.

Labels: Digal Investment and Holdings, Dov Weisglass, Mivtach Shamir, Nof, Techsal Trading Ltd.

posted by Carl in Jerusalem @ 6:04 PM