Ofer Yannai in Financial Turmoil: Massive Debts of Billions of Shekels Revealed
The Israel Securities Authority claims that Nofar Energy breached financial covenants for two quarters. Due to a massive gap in debt calculation, the businessman is forced to take an unusual step.
Businessman Ofer Yannai and the company "Nofar Energy" under his control are facing a significant financial upheaval revolving around massive debts of billions of shekels. At the center of the storm is the position of the Israel Securities Authority, which claims that the company breached its financial covenants with bondholders (series A through D) for two quarters.
The dramatic implication of this determination is the opening for a demand by the holders for the immediate repayment of a debt in the massive amount of 2.2 billion shekels. The root of the dispute concerns the way the company calculates its net financial debt in relation to operating profit (EBITDA).
While Nofar declares a net debt of about 1.06 billion shekels, the Authority estimates that the real amount is much higher and stands at at least 1.96 billion shekels. As reported in Calcalist, this deep gap stems from the company's decision to deduct from its calculations debts belonging to projects under construction and to held companies that are not consolidated in the balance sheet.
"Following the pressure, Yannai will be forced to convene the bondholders on August 5 to ask them to retroactively approve the company's unique calculation method."
This move puts institutional bodies in a problematic position, as many of them also hold Nofar shares, which raises concerns about a conflict of interest in such a fateful vote on the future of the debts.
Nofar Energy's response:
The company categorically denies any claim of a breach of financial covenants or the trust deed. According to its claim, the debt calculation method relies on a correct and common economic interpretation in the industry, which was backed by strict legal and accounting opinions. Nofar emphasizes that the Israel Securities Authority did not determine that there was a breach, but only pointed to the possibility of a different interpretation of the text. The holders' meeting was convened at the company's initiative and out of extreme caution only to remove ambiguity, and any attempt to present the event as a breach of obligations is tantamount to libel.
