Funds that bought Cimed bonds cheaply expect multi-million profit from asset sales
Trustees of the collapsed summer camp company Cimed have reached agreements to sell its assets, potentially allowing for full debt repayment to Israeli investors. Funds like Clearmark and Brosh, which purchased bonds after the collapse, expect significant returns from the realization of hidden value.
Is a happy ending approaching in the collapse of the summer camp company Cimed? A little over two months after the scandal involving the alleged embezzlement of bond investor funds (a debt of 620 million shekels) broke out, Cimed reported that it has completed a bidding process for the sale of assets pledged to Israeli bondholders. The sale is being conducted at a price above their book value.
According to the company, the bidding process, led by Chief Restructuring Officer (CRO) Asaf Ravid alongside US-based investment bankers and lawyers, resulted in offers to purchase assets at a premium of about 7% over their book value.
The assets pledged to Cimed's bond series are expected to yield 321 million dollars in proceeds, compared to a balance sheet value of approximately 282 million dollars. Including the private sale of the Achim camp (about 7 million dollars) and the Chen-a-Wanda camp (about 17 million dollars), the total proceeds for creditors amount to about 345 million dollars—a 13.5% premium over the 304 million dollar book value.
Investor Outlook
The emerging sale brings relief to institutional entities that invested in Cimed bonds. After initial fears that funds were lost, the probability of a full repayment of principal plus default interest has significantly increased.
Notable investors include the Meitav investment house, which invested about 190 million shekels. Other major holders included Yelin Lapidot (47 million shekels), IBI, and Harel (28 million shekels each). However, the largest profits are expected by distressed-debt funds Clearmark and Brosh, which acquired significant portions of the debt after the scandal caused bond prices to plummet by over 50% in late May.
Corporate Debt Market Tensions
Alongside the Cimed events, a "mini-drama" unfolded in the local corporate debt market, with bondholders led by the Meitav investment house opposing management moves at Partner and Nofar Energy. At Partner, investors blocked a plan to distribute 500 million shekels in special dividends, which would have been financed by 750 million shekels in new debt. At Nofar Energy, a dispute with the Securities Authority over the definition of "net financial debt" led the board to decide on an early redemption of 400 million shekels in bonds.
2-3x Profit in Two Months
The Brosh fund, led by Amir Efrati, purchased 15% of all bonds, while Clearmark made smaller purchases. Transactions were executed at 29-45 agorot per bond. Analysts estimate that holders will receive a return of 1.1-1.15 shekels per bond upon completion.
Clearmark, managed by Yaniv Tzalal, also provided Cimed with a 60 million dollar loan at an 11% annual interest rate to ensure continued operations. The asset sales require approval from a New Jersey court, expected by August 10. If approved, binding agreements are expected to be signed in September.
