Confusing situation for Agrexco

The Israeli government is joining the wave of debt arrangements by companies that have issued bonds to the public. "Globes" states sources that Agrexco, which is controlled by the state, is proposing a 35% "haircut" to its bondholders.

This week, "Globes" revealed that Agrexco intended to turn to a debt arrangement because of heavy losses it incurred last year, and a going concern warning that its auditors appended to its financial statements.

The agricultural export company owes €32 million (about NIS 150 million) to institutions to which it issued bonds in 2007. It is now proposing to them to convert 35% of the debt to 10% of its equity, and the rest to reschedule over along period. In return, the state will inject capital into the company and make a partial payment in cash.

Agrexco had revenue of some €490 million in 2010, but posted a net loss of €33 million. The company explains the losses by a loss of market share in Europe, the weakness of the euro, and climatic events in Israel.