Zisser loses Elbit as massive debt settlement signed

One of the largest debt settlements ever signed in Israel, involving some 1.8 billion shekels ($520 million), was reached in Tel Aviv Sunday between Motti Zisser's Elbit Imaging Ltd. and Bank Hapoalim. Tel Aviv District Court Judge Eitan Orenstin presided over the hearing, and is expected to rule in the next few days on whether he approves the settlement.

A Bank Hapoalim representative told the court that the bank and Elbit had signed an agreement and the bank had decided to support the settlement. Elbit, whose main holdings are in foreign real estate, has been struggling to meet payments over the last few years.

Elbit's total debt amounts to about 2.5 billion shekels ($720 million). Under the debt restructuring plan, some NIS 1.8 billion of the debt owed to various banks and bondholders will be forgiven and two new bonds series, worth about NIS 660 million ($189 million), will be issued. Zisser will be stripped of his control of the company, and the bondholders and creditors will gain control of 95 percent of its shares.

Orenstin is expected to issue his ruling this week. If approved, the agreement will be one of the largest financial settlements in the Israeli business sector's financial history.

It is believed that Bank Hapoalim is the largest creditor of Zisser's crumbling corporate pyramid. The bank's attorneys said the bank would receive 3% of Elbit's shares following the settlement, adding to its current 2.5% stake in the company.

The legal proceedings in the matter have been continuing for over a year. The settlement comes just a few weeks after businessman Nochi Dankner lost control of IDB Holdings -- a company he spent 15 years building -- over unpaid debts, in a highly publicized legal battle. Elbit's NIS 2.5 billion debt is larger than IDB's, which amounted to NIS 2 billion ($570 million).