o
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2013
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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o
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report _____________
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Title of each class:
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Name of each exchange on which registered:
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ORDINARY SHARES, NO PAR VALUE
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NASDAQ GLOBAL SELECT MARKET
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o
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U.S. GAAP
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x
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International Financial Reporting Standards as issued by the International Accounting Standards Board
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o
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Other
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ITEM
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DESCRIPTION
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136
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CERTIFICATIONS
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INDEX TO FINANCIAL STATEMENTS
|
F-1
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Currency
|
$1.00 as of December 31, 2013
|
1 New Israeli Shekel (NIS)
|
0.28736
|
1 Euro
|
1.37679
|
1 Great British Pound (GBP)
|
1.64912
|
1 Hungarian Forint (HUF)
|
0.00465
|
1 Czech Republic Koruny (CZK)
|
0.05024
|
1 Romanian LEI (RON)
|
0.30869
|
1 Polish Zloty (PLN)
|
0.33210
|
1 Indian Rupee (INR)
|
0.01619
|
1 Crore (10 million INR)
|
161,900
|
MONTH
|
HIGH
|
LOW
|
1 U.S. dollar =NIS
|
1 U.S. dollar =NIS
|
|
October 2013
|
3.567
|
3.518
|
November 2013
|
3.569
|
3.519
|
December 2013
|
3.530
|
3.471
|
January 2014
|
3.507
|
3.483
|
February 2014
|
3.549
|
3.496
|
March 2014
|
3.504
|
3.459
|
April 2014 (through April 28)
|
3.493
|
3.461
|
PERIOD
|
AVERAGE EXCHANGE RATE
|
January 1, 2009 - December 31, 2009
|
3.932 NIS/$1
|
January 1, 2010 - December 31, 2010
|
3.735 NIS/$1
|
January 1, 2011 - December 31, 2011
|
3.577 NIS/$1
|
January 1, 2012 - December 31, 2012
|
3.857 NIS/$1
|
January 1, 2013 - December 31, 2013
|
3.609 NIS/$1
|
ITEM
1.
|
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
|
ITEM
2.
|
OFFER STATISTICS AND EXPECTED TIMETABLE
|
ITEM
3.
|
KEY INFORMATION
|
A.
|
SELECTED FINANCIAL DATA
|
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||
Convenience translation
|
||||||||||||||||||||||||
($'000)
|
||||||||||||||||||||||||
Income revenues and gains
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Revenues from sale of commercial centers
|
2,482 | 8,614 | 67,594 | 3,525 | 4,345 | - | ||||||||||||||||||
Revenue from hotel operations and management
|
58,424 | 202,791 | 206,746 | 286,548 | 403,822 | 396,736 | ||||||||||||||||||
Revenue from fashion merchandise and other
|
42,982 | 149,192 | 144,141 | 185,082 | 174,817 | 118,386 | ||||||||||||||||||
Total revenues
|
103,888 | 360,597 | 418,481 | 475,155 | 582,984 | 515,122 | ||||||||||||||||||
Gains and other
|
||||||||||||||||||||||||
Rental income from commercial centers
|
37,381 | 129,748 | 147,185 | 111,745 | 98,550 | 85,466 | ||||||||||||||||||
Gains from sale of real estate assets
|
- | - | 9,368 | - | 198,777 | - | ||||||||||||||||||
Gains from changes of shareholding in investees
|
- | - | 53,875 | - | - | 31,106 | ||||||||||||||||||
Total gains
|
37,381 | 129,748 | 210,428 | 111,745 | 297,327 | 116,572 | ||||||||||||||||||
Total income revenues and gains
|
141,269 | 490,345 | 628,909 | 586,900 | 880,311 | 631,694 | ||||||||||||||||||
Expenses and losses
|
||||||||||||||||||||||||
Commercial centers
|
35,937 | 124,737 | 213,367 | 159,626 | 156,745 | 169,253 | ||||||||||||||||||
Hotel operations and management
|
51,610 | 179,137 | 186,760 | 240,784 | 341,291 | 353,229 | ||||||||||||||||||
Cost of fashion merchandise and other
|
41,031 | 142,417 | 154,220 | 211,743 | 197,574 | 134,142 | ||||||||||||||||||
General and administrative expenses
|
17,471 | 60,643 | 48,771 | 61,857 | 65,292 | 66,153 | ||||||||||||||||||
Share in losses of associates, net
|
97,675 | 339,030 | 102,127 | 7,568 | 8,275 | 14,039 | ||||||||||||||||||
Financial expenses
|
97,214 | 337,423 | 187,667 | 164,001 | 316,706 | 283,546 | ||||||||||||||||||
Financial income
|
(1,132 | ) | (3,930 | ) | (28,303 | ) | (65,571 | ) | (40,927 | ) | (92,725 | ) | ||||||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
19,708 | 68,407 | 50,229 | (275,537 | ) | 53,016 | 70,702 | |||||||||||||||||
Write-down, charges and other expenses, net
|
242,426 | 841,462 | 302,093 | 290,276 | 83,660 | 256,802 | ||||||||||||||||||
601,940 | 2,089,326 | 1,216,931 | 794,747 | 1,181,632 | 1,255,141 | |||||||||||||||||||
Loss before income taxes
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(460,671 | ) | (1,598,981 | ) | (588,022 | ) | (207,847 | ) | (301,321 | ) | (623,447 | ) | ||||||||||||
Income taxes (tax benefits)
|
(9,201 | ) | (31,937 | ) | (9,212 | ) | 63,283 | 3,992 | (35,571 | ) | ||||||||||||||
Loss from continuing operations
|
(451,470 | ) | (1,567,044 | ) | (578,810 | ) | (271,130 | ) | (305,313 | ) | (587,876 | ) | ||||||||||||
Profit from discontinued operations, net
|
586 | 2,034 | 94,826 | 24,101 | 378,838 | (63,129 | ) | |||||||||||||||||
Profit (loss) for the year
|
(450,884 | ) | (1,565,010 | ) | (483,984 | ) | (247,029 | ) | 73,525 | (651,005 | ) | |||||||||||||
Attributable to:
|
||||||||||||||||||||||||
Equity holders of the Company
|
(332,945 | ) | (1,155,645 | ) | (315,746 | ) | (264,919 | ) | 61,998 | (530,942 | ) | |||||||||||||
Non-controlling interest
|
(117,939 | ) | (409,365 | ) | (168,238 | ) | 17,890 | 11,527 | (120,063 | ) | ||||||||||||||
(450,884 | ) | (1,565,010 | ) | (483,984 | ) | (247,029 | ) | 73,525 | (651,005 | ) | ||||||||||||||
Earnings per share - (in NIS)
|
||||||||||||||||||||||||
Basic earnings (loss) per share:
|
||||||||||||||||||||||||
From continuing operations
|
(13.39 | ) | (46.49 | ) | (16.64 | ) | (11.44 | ) | (12.21 | ) | (21.51 | ) | ||||||||||||
From discontinued operations
|
0.02 | 0.07 | 3.95 | 0.79 | 14.67 | 0.65 | ||||||||||||||||||
(13.37 | ) | (46.42 | ) | (12.69 | ) | (10.65 | ) | 2.45 | (20.86 | ) | ||||||||||||||
Diluted earnings (loss) per share:
|
||||||||||||||||||||||||
From continuing operations
|
(13.39 | ) | (46.49 | ) | (16.64 | ) | (11.44 | ) | (12.21 | ) | (21.53 | ) | ||||||||||||
From discontinued operations
|
0.02 | 0.07 | 3.95 | 0.79 | 14.41 | 0.65 | ||||||||||||||||||
(13.37 | ) | (46.42 | ) | (12.69 | ) | (10.65 | ) | 2.13 | (20.88 | ) | ||||||||||||||
Dividend declared per share
|
0 | 0 | 0 | 0 | 0 |
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||
Convenience translation
|
||||||||||||||||||||||||
($ '000)
|
||||||||||||||||||||||||
Current Assets
|
200,042 | 694,348 | 1,042,069 | 1,258,227 | 2,123,961 | 2,384,465 | ||||||||||||||||||
Non-current Assets
|
1,114,979 | 3,870,096 | 5,700,578 | 9,112,840 | 8,578,752 | 7,023,724 | ||||||||||||||||||
Total
|
1,315,021 | 4,564,444 | 6,742,647 | 10,371,067 | 10,702,713 | 9,408,189 | ||||||||||||||||||
Current Liabilities
|
1,381,295 | 4,794,477 | 1,721,661 | 2,226,971 | 2,799,122 | 2,353,973 | ||||||||||||||||||
Non-current Liabilities
|
51,453 | 178,597 | 3,631,878 | 6,605,226 | 5,726,070 | 4,906,045 | ||||||||||||||||||
Shareholders' equity Attributable to:
|
||||||||||||||||||||||||
Equity holders of the company
|
(297,504 | ) | (1,032,637 | ) | 288,630 | 359,630 | 760,740 | 946,450 | ||||||||||||||||
Non-controlling interest
|
179,777 | 624,007 | 1,100,478 | 1,179,240 | 1,416,781 | 1,201,721 | ||||||||||||||||||
Total
|
1,315,021 | 4,564,444 | 6,742,647 | 10,371,067 | 10,702,713 | 9,408,189 |
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
D.
|
RISK FACTORS
|
·
|
changes in global and national economic conditions, including global or national recession, such as those triggered by the recent economic crisis;
|
·
|
a general or local slowdown in the real property market which may make it difficult to sell a property, such as the recent global slowdown;
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·
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political events that may have a material adverse effect on the hotel industry;
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·
|
competition from other lodging facilities, and oversupply of hotel rooms in a specific location;
|
·
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material changes in operating expenses, including as a result of changes in real property tax systems or rates or labor laws;
|
·
|
changes in the availability, cost and terms of financing;
|
·
|
the effect of present or future environmental laws;
|
·
|
our ongoing need for capital improvements and refurbishments; and
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·
|
material changes in governmental rules and policies.
|
·
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employment levels;
|
·
|
availability of financing for homebuyers;
|
·
|
interest rates;
|
·
|
consumer confidence;
|
·
|
levels of new and existing homes for sale;
|
·
|
demographic trends;
|
·
|
urban development and changes;
|
·
|
housing demand;
|
·
|
local laws and regulations; and
|
·
|
acts of terror, floods or earthquakes.
|
·
|
difficulty in acquiring land suitable for residential building at affordable prices in locations where our potential customers would like to live;
|
·
|
shortages of qualified trades people;
|
·
|
reliance on local subcontractors, who may be inadequately capitalized;
|
·
|
shortages of materials; and
|
·
|
volatile increases in the cost of labor and materials, particularly increases in the price of lumber, drywall and cement, which are significant components of home construction costs.
|
·
|
the inability to obtain financing for development at attractive terms or at all;
|
·
|
delays in obtaining zoning (or land classification, as the case may be for each jurisdiction) and other approvals;
|
·
|
the unavailability of materials and labor;
|
·
|
the abilities of subcontractors to complete work competently and on schedule;
|
·
|
the surface and subsurface condition of the land underlying the project;
|
·
|
environmental uncertainties;
|
·
|
extraordinary circumstances or "acts of God"; and
|
·
|
ordinary risks of construction that may hinder or delay the successful completion of a particular project.
|
ITEM 4
.
|
INFORMATION ON THE COMPANY
|
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
B.
|
BUSINESS OVERVIEW
|
|
·
|
Commercial and Entertainment Centers
- Initiation, construction and sale of commercial and entertainment centers and other mixed-use real property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India, primarily through PC. In certain circumstances and depending on market conditions, we operate and manage commercial and entertainment centers prior to their sale;
|
|
·
|
Hotels
- Hotel operation and management;
|
|
·
|
Medical Industries
- (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine;
|
|
·
|
Residential Projects
- Initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India; and
|
|
·
|
Fashion Apparel
- Distribution and marketing of fashion apparel and accessories in Israel.
|
Name of Project
|
Location
|
Type
|
Title
|
PC Share %
1
|
Approx. Land Area (m
2
)
|
Approx. Gross Lettable Area (m
2
)
|
Estimated Completion
|
Status
|
Lodz Plaza
|
Lodz, Poland
|
Commercial and Entertainment Center
|
Perpetual Usufruct
|
100
|
50,000
|
35,000
|
2016/7
|
Planning and development stage
|
Timisoara Plaza
|
Timisoara, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
32,000
|
38,000
|
2016
|
Planning and development stage
|
Belgrade Plaza (Visnjicka)
|
Belgrade, Serbia
|
Commercial and Entertainment Center
|
Land use rights
|
100
|
31,000
|
32,000
|
2015/6
|
Planning and development stage
|
Casa Radio
|
Bucharest, Romania
|
Mixed Use
|
Leasing for 49 years
|
75
3
|
97,000
|
555,000
2, 4
|
2017 (first phase)
|
Planning and development stage
|
Cina
|
Bucharest, Romania
|
Mixed Use
|
Leasing for 49 years
|
100
|
3,395
|
4,786
|
2015/6
|
Planning and development stage
|
Belgrade Plaza (MUP)
|
Belgrade, Serbia
|
Mixed Use
|
Ownership
|
100
|
9,000
|
63,000
2
|
2017
|
Planning and development stage
|
|
1
|
Directly or indirectly.
|
|
2
|
Gross building area (“GBA”).
|
|
3
|
Other investors in the project include the Government of Romania, which will procure that the project company is granted the necessary development and exploitation rights in relation to the site for a 49-year period in consideration for a 15% interest in the project and an additional developer which holds 10%.
|
|
4
|
The project will consist of a complex with a planned GBA of approximately 555,000 square meters (including parking), and will include a commercial and entertainment center of approximately GLA of 76,000 square meters, with a hypermarket of approximately 11,000 square meters, hotel complex with conference center and 300 rooms, an apartment hotel with 150 apartments, a ferris wheel and 148,000 square meters of offices.
|
Country
|
Estimated cost of completion
|
Percentage Pre-leased *
|
Poland
|
ˆ
50.5 million (approximately $69.5.million)
|
-
|
Romania1
|
ˆ
186.9 million (approximately $257.4 million)
|
-
|
Serbia
|
ˆ136.2 million (approximately $187.5 million)
|
-
|
Name of Project
|
Location
|
Type
|
Title
|
PC Share %
1
|
Approx. Land Area (m
2
)
|
Approx. Gross Lettable Area (m
2
)
|
Estimated Completion
|
Csiki Plaza
|
Miercurea Ciuc, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
36,500
|
14,000
|
-
|
Kielce Plaza
|
Kielce, Poland
|
Commercial and Entertainment Center
|
Perpetual Usufruct
|
100
|
30,000
|
33,000
|
-
|
Leszno Plaza
|
Leszno, Poland
|
Commercial and Entertainment Center
|
Perpetual Usufruct
|
100
|
18,000
|
16,000
|
-
|
Shumen Plaza
|
Shumen, Bulgaria
|
Commercial and Entertainment Center
|
Ownership
|
100
|
26,000
|
20,000
|
-
|
Slatina Plaza
|
Slatina, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
24,000
|
17,000
|
-
|
Constanta Plaza
|
Constanta,
Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
26,500
|
18,000
|
-
|
Hunedoara Plaza
|
Hunedoara, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
41,000
|
14,000
|
-
|
Targu Mures Plaza
|
Targu Mures, Romania
|
Commercial and Entertainment Center
|
Ownership
|
100
|
31,500
|
10,000
|
-
|
Pireas Helios Plaza
|
Athens, Greece
|
Commercial and Entertainment Center
|
Ownership
|
100
|
15,000
|
26,000
|
-
|
Iasi Plaza
|
Iasi, Romania
|
Mixed Use
|
Ownership
|
100
|
46,500
|
58,000
|
-
|
Arena Extension
|
Budapest, Hungary
|
Offices
|
Land use rights
|
100
|
22,000
|
40,000
|
-
|
Name and Rate of Hotel
|
Title
|
Our Share
As of December 31, 2012
|
Approximate Constructed Area
(square feet)
|
Total Rooms and description
|
Average Occupancy Rates During 2013 (%)
|
Additional information
|
Radisson Blu Astrid Antwerp
Antwerp, Belgium
Four Star Deluxe
|
Freehold
|
100%
|
223,000
|
247 rooms including business class suites & 19 new luxury apartments
|
78%
|
Includes an oceanarium attraction, 18 conference rooms, a bar, a restaurant and a fully equipped health club with a pool
|
Radisson Blu Bucharest
Bucharest, Romania
Five Star Hotel and ApartHotel (formerly Centerville)
|
Freehold
|
77%
|
900,000
|
424 rooms suites, executive suites and one exclusive royal suite and 294 apartments in a level of 4 and 5 stars
|
71%
|
The complex of both hotels includes several restaurants, a spa and a world class health academy, casino, shopping area and supermarket services
|
Park Inn
Antwerp, Belgium
Three star boutique
|
Freehold
|
100%
|
32,250
|
59 rooms going from standard to junior suite with terrace
|
85%
|
Includes a restaurant, a lounge and a fitness room
|
Name of Project
|
Location
|
Title
|
Share %
|
Approximate Land Area (square meters)
|
Approximate Gross Built
Area (square meters)
|
Estimated Project Phase Completion
|
Chennai
|
Chennai, Tamil Nadu State, India
|
Ownership
|
80
1,
2
|
340,000 (of which rights to 302,400 obtained so far)
|
210,000
3
(for sale)
|
2015-2018
|
1
|
For information regarding the EPI Agreement, a joint venture agreement signed with PC in respect to our India operations, see “ - joint venture with PC to Develop Mixed-Use Projects in India” above.
|
2
|
For information regarding the rights of Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, in the projects, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman."
|
|
3
As EPI is currently operating to secure a joint development agreement with local developer(s) for the development of the project land, this approximate GBA reflects the currently negotiated transaction. Correspondingly, this figure is comprised of two elements - plotted development parcels for sale and built up villa.
|
Name of Project
|
Location
|
Title
|
Share %
1
|
Approximate Land Area (square meters)
|
Approximate Gross Built
Area (square meters)
|
Estimated Completion
|
|
Łódź
|
Łódź, Poland
|
Ownership
|
100
|
33,500
|
80,000
|
-
|
|
Plaza BAS Joint Venture
|
Fountain Park
|
Bucharest, Romania
|
Ownership
|
12.5
|
14,000
|
16,600
|
-
|
Acacia Park
|
Ploiest, Romania
|
Ownership
|
25
|
12,500
|
32,000
|
-
|
|
Green Land
|
Ploiest, Romania
|
Ownership
|
25
|
18,400
|
25,800
|
-
|
|
Poiana Brasov
|
Brasov, Romania
|
Ownership
|
25
|
73,000
|
138,000
|
-
|
|
Pine Tree Glade
|
Brasov, Romania
|
Ownership
|
25
|
28,300
|
40,000
|
-
|
|
Bangalore Project
|
Bangalore, Karnataka State, India
|
Freehold and Development Rights
|
2, 3,4
|
667,600 (of which rights to 218,500 obtained so far)
4
|
310,000
|
-
|
|
Kochi
|
Kochi, Kerala State, India
|
Freehold and
Development Rights
|
50
2,3,5
|
166,000
(of which rights to 52,600 obtained so far)
|
575,000
|
-
7
|
1
|
Represents share percentage owned by PC.
|
2
|
For information regarding the EPI Agreement, a joint venture agreement signed with PC in respect to our India operations, see “ - joint venture with PC to Develop Mixed-Use Projects in India” above.
|
3
|
For information regarding the rights of Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, in the projects, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman."
|
4
|
The original scope of the project was reduced from approximately 440 acres to 165 acres. The above data relates to the project as revised pursuant to a framework agreement dated July 22, 2010.
|
5
|
For information regarding the allotment of our shares in the Kochi project SPV see "Kochi, Kerala state, India".
|
|
·
|
EPI will remain the holder of 100% of the equity and voting rights in the SPV;
|
|
·
|
the scope of the new Project will be decreased to approximately 165 acres instead of 440 acres (the "New Project");
|
|
·
|
the Partner undertook to complete the acquisitions of the additional land and/or the development rights therein in order to obtain the ownership and/or the development rights over the 165 acres;
|
|
·
|
The land over and above the 54 acres (which are currently registered on the name of the SPV) up to 165 acres (i.e. 165 acres minus 54 acres = 111 acres) will not get registered on the SPV’s name.
|
|
·
|
the SPV and/or EPI will not be required to pay any additional amounts in respect of such land acquisitions or with respect to the Project and its development; and
|
|
·
|
the Project will be re-designed as an exclusive residential project.
|
2013
|
2012
|
2011
|
Convenience Translation in U.S. Dollars for
2013
|
|||||||||||||
Israel
|
149,192 | 152,470 | 183,552 | 42,983 | ||||||||||||
Western Europe
|
104,412 | 169,211 | 171,359 | 30,081 | ||||||||||||
Central and Eastern Europe
|
269,896 | 342,784 | 246,860 | 77,757 | ||||||||||||
Other and Allocations
|
(33,156 | ) | (35,556 | ) | (14,871 | ) | (9,552 | ) | ||||||||
Total Revenues
|
490,344 | 628,909 | 586,900 | 141,269 |
2013
|
2012
|
2011
|
Convenience Translation in U.S. Dollars for
2013
|
|||||||||||||
Commercial and Entertainment Centers
|
162,639 | 300,641 | 111,726 | 46,857 | ||||||||||||
Hotels
|
202,791 | 276,703 | 286,548 | 58,424 | ||||||||||||
Medical Companies*
|
74,670 | 286,031 | 53,324 | 21,512 | ||||||||||||
Residential Projects
|
- | 1,622 | 3,544 | - | ||||||||||||
Fashion Apparel
|
149,192 | 152,470 | 183,552 | 42,982 | ||||||||||||
Other and Allocations*
|
(98,948 | ) | (388,558 | ) | (51,794 | ) | (28,506 | ) | ||||||||
Total
|
490,345 | 628,909 | 586,900 | 141,269 |
|
·
|
shopping centers which are not in close proximity and which do not draw their clientele from the same population areas are not considered competitive;
|
|
·
|
we believe that large retail centers (known as "power centers"), even if they compete with our centers directly merely by virtue of their proximity to our commercial and entertainment centers, are at a disadvantage because they do not offer the entertainment facilities that are offered at our commercial and entertainment centers, and which we consider to be a significant element in the attraction of our patrons. These power centers also lack a wide range of services and common areas; and
|
|
·
|
in the regional cities of our targeted countries, competitive activity is more limited. In these cities, we compete with traditional shopping outlets. These outlets lack the added benefit of the entertainment activities that our centers offer and, accordingly, we believe that they have difficulty competing with us.
|
C.
|
ORGANIZATIONAL STRUCTURE
|
NAME OF COMPANY
|
COUNTRY OF ORGANIZATION
|
DIRECT/INDIRECT OWNERSHIP PERCENTAGE
|
Plaza Centers N.V.
|
The Netherlands
|
62.5%
(1)
|
Elscint Holdings & Investment N.V.
|
The Netherlands
|
100%
|
Elbit Medical Technologies Ltd.
|
Israel
|
90%
(2)
|
Elbit Plaza India Real Estate Holdings Limited
|
Cyprus
|
50%
(3)(4)
|
Elbit Fashion Ltd.
|
Israel
|
100%
|
Elbit Ultrasound (Luxemburg) B.V./Sa r.l.
|
Luxemburg
|
100%
|
(1)
|
Approximately 58% on a fully diluted basis.
|
(2)
|
Approximately 85% on a fully diluted basis.
|
(3)
|
We hold 47.5% of the shares in EPI directly, and an additional 47.5% through PC. For additional information as to the joint venture signed between us and PC regarding EPI, see “Item 4.B Business Overview - Residential Projects.”
|
(4)
|
For details as to the grant of 5% of EPI’s equity to Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman."
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
ITEM 4
A.
|
UNRESOLVED STAFF COMMENTS.
|
ITEM
5.
|
OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
|
|
·
|
Commercial and Entertainment Centers
- Initiation, construction and sale of commercial and entertainment centers and other mixed-use real property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India, primarily through Plaza Centers N.V. ("PC"), of which we own approximately 62.5% of its share capital. In certain circumstances and depending on market conditions, we operate and manage commercial and entertainment centers prior to their sale;
|
|
·
|
Hotels
- Hotel operation and management primarily in major European cities;
|
|
·
|
Medical Industries
- through our investee entities we are dealing with (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine;
|
|
·
|
Residential Projects
- Initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India; and
|
|
·
|
Fashion Apparel
- Distribution and marketing of fashion apparel and accessories in Israel.
|
|
·
|
On April 13, 2014 Elbit Medical announced that on March 25, 2014, InSightec notified Elbit Medical that its Board of Directors has approved the terms of a non-binding draft term sheet with an investor which is not a current shareholder of InSightec (the “Investor”), pursuant to which the Investor shall purchase InSightec share capital. The proposed investment shall be based on a company valuation which is significantly higher than the company valuation set on the previous round of capital investment in InSightec.
|
|
On April 6, 2014, InSightec notified Elbit Medical that the aforementioned non-binding term sheet was entered between the parties. To date, no definitive agreement has been signed, the investment amount is yet to be finalized, and there is no certainty that the negotiation of such non-binding term sheet will lead to the conclusion of a definitive agreement or that a transaction will be completed. The execution of a definitive agreement is subject to certain conditions precedent, including but not limited to, the approval of the authorized corporate organs of each of Elbit Medical, other shareholders of InSightec and the Investor.
|
|
·
|
On March 31, 2014 we formally notified Mr. Mordechay Zisser of the termination of his services as our chief executive officer and executive president, effective as of such date, and have yet to appoint a new chief executive officer. In addition, on March 13, 2014 new board members were appointed and Mr. Shimon Yitzhaki (whose membership on the Board had ceased following the election) ceased to serve as the Executive Chairman
of our Board of Directors, effective as of even date and on March 21, 2014, Mr. Ron Hadassi was appointed Chairman of our Board of Directors. On or about April 10, 2014, Mr. Yitzhaki was surrendered with an employment termination notice.
|
|
·
|
On March 26, 2014 PC announced that it has agreed to make certain commercial amendments to its debt restructuring plan (the “Amended PC Plan”), which it intends to submit to the District Court of Amsterdam in the Netherlands (the “Dutch Court”). According to such announcement, the Amended PC Plan shall include the following material understandings:
|
|
o
|
The Amended PC Plan shall be contingent upon a cash injection of ˆ20 million into PC (the “Equity Contribution”), and will become effective only once such Equity Contribution has been made.
|
|
o
|
PC shall issue to the holders of unsecured debt, i.e. the outstanding Israeli Series A and B Notes and the Polish Notes (“Unsecured Debt”), shares of PC equal to 13.5% of PC's share capital (following the Equity Contribution) for no consideration. Such issuance of shares will be distributed among the holders of Unsecured Debt pro rata to the relative share of each relevant creditor in the Deferred Debt (as defined below) ("Deferred Debt Ratio").
|
|
o
|
All principal payments of any Unsecured Debt (“Deferred Debt”) due during 2013-2015 shall be deferred for three years from the date of approval of the Amended PC Plan by the Dutch Court (“Approval Date”). If within two years from the Approval Date PC repays 50% or more of the Unsecured Debt, the remaining principal payments shall be deferred for an additional one year.
|
|
o
|
Interest payments for the Unsecured Debt that were due during the suspension of payments period will be added to the principal and will be payable together with it. Following the expiration of the suspension of payments order (“Effective Date”), interest payments will be payable on their respective due dates.
|
|
o
|
As of January 1, 2014, the annual interest rate of the Unsecured Debt shall be increased by 1.5%.
|
|
o
|
Following the Effective Date, PC shall pay to the holders of the Unsecured Debt an amount of ˆ10.5 million on account of the interest payments that were due during 2014.
|
|
o
|
PC, its directors and officers and us shall be fully released from all claims.
|
|
o
|
Following the Effective Date, PC will be required to assign 75% of the net proceeds received from the sale or refinancing of any of its assets to early repayment of the Unsecured Debt, to be allocated among the holders of Unsecured Debt in accordance with the Deferred Debt Ratio.
|
|
o
|
PC will be permitted to engage in investments only if its cash reserves contain an amount equal to general and administrative expenses and interest payments for the Unsecured Debt for a six-month period (for this purpose also receivables with a high probability of being collected in the subsequent six-month period will be taken into account in calculating the required minimal cash reserve).
|
|
o
|
The Amended PC Plan shall also include, inter alia: (i) certain limitations on distribution of dividends and incurring of new indebtedness; (ii) a negative pledge on direct and indirect holdings of PC on real estate assets; (iii) financial covenants and undertakings of PC with respect to the sale and financing of certain projects and investment in new projects; and (iv) a commitment to publish quarterly financial statements as long as the Unsecured Debt is outstanding.
|
|
o
|
The Amended PC Plan will be subject to the approval of PC's unsecured creditors, a meeting of which is scheduled to be held on June 26, 2014, at the Dutch Court. For a discussion of PC’s debt restructuring process, see “2013” below.
|
|
·
|
On March 18, 2014, Elbit Medical announced that Gamida received a non-binding proposal contemplating its purchase by the Purchaser. The proposed consideration for such purchase is expected to include a payment of a significant amount upon closing, as well as certain milestone-based payments (contingent upon development, regulatory approvals or sales related to Gamida’s product), with such proposed consideration expected to amount to up to several hundred million dollars. No definitive agreement has been signed to date and there is no certainty that the negotiation of such non-binding proposal will lead to the conclusion of a definitive agreement or that a transaction will be completed. The execution of a definitive agreement is subject to certain conditions precedent, including but not limited to, the approval of the authorized corporate organs of each of Gamida, Elbit Medical, other shareholders of Gamida and the Purchaser.
|
|
·
|
On March 13, 2014 we announced the results of the Extraordinary General Meeting of shareholders, in which the following nominees were duly elected as members of our board of directors in place of all of the previous non-external members of the Board: Alon Bachar, Eliezer Avraham Brender, Ron Hadassi, Shlomo Kelsi, Yoav Kfir, Boaz Lifschitz and Nadav Livni.
|
|
·
|
On February 20, 2014 following the satisfaction of all conditions required to be satisfied prior to the effectiveness of the Debt Restructuring (other than registration of liens in favor of the trustees of the new series of notes) the Debt Restructuring, pursuant to which our outstanding unsecured financial debt was cancelled in exchange for the issuance of Series H Notes, Series I Notes and ordinary shares was consummated and came into effect. The Series H Notes and the Series I Notes were listed on the TASE, and the New Shares were listed on NASDAQ and the TASE. For a discussion of the approval and consummation of the Debt Restructuring, please see the Forms 6-K we filed on September 18, 2013, January 2, 2014 and February 20, 2014.
|
|
·
|
On September 18, 2013, our unsecured financial creditors (the holders of our publicly-traded Series 1 and Series A to Series G notes and Bank Leumi approved the Debt Restructuring under Section 350 of the Israeli Companies Law, and on January 1, 2014, the Court approved the Debt Restructuring. Following the Court Ruling, a holder of our Series B Notes that had filed the Previous Action filed an appeal with the Israeli Supreme Court arguing that the Court erred in approving the Debt Restructuring, with specific reference to the Court's approval of the provision of the Debt Restructuring that provides exemption from personal civil liability for our officers and directors (other than Mr. Mordechai Zisser) and the denial of the Previous Action. The appeal is still outstanding, and is scheduled to be heard in February 2015.
|
|
·
|
In accordance with the terms of the Debt Restructuring, our unsecured financial creditors were issued 509,713,459 ordinary shares, which represented 95% of our share upon effectiveness of the Debt Restructuring on a fully diluted basis (except for certain options issued to our employees and officers) and before the issuance of our ordinary shares to Bank Hapoalim (as detailed herein). According to the terms of the Debt Restructuring, the outstanding balance under our unsecured financial debt was extinguished and converted into these ordinary shares and new notes issued by us to our unsecured financial creditors. The aggregate principal amount of the two series of new notes issued pursuant to the Debt Restructuring is equal to NIS 666 million (approximately $190.3 million). The principal amount of the first series of new notes is equal to NIS 448 million (approximately $128.7 million), repayable in a single payment by May 31, 2018. The principal amount of the second series of new notes is equal to NIS 218 million (approximately $62.3 million), repayable in a single payment by November 30, 2019. Both series of the new notes bear interest at the rate of 6% per annum and are linked to the Israeli consumer price index, while interest on the first series of new notes is payable in cash on a semi-annual basis, and interest on the second series of new notes will be payable on the final maturity date. In addition, the new notes include mandatory prepayment provisions in the event we pay cash, distribute dividends or make any other distribution within four and half years following the date of issuance thereof, such that we will be obligated to prepay an amount equal to the amount distributed. In addition, the New Notes will be secured by first ranking and second ranking floating charges that will be placed on all of our assets in favor of the Series H and Series I Trustees, respectively, and first-ranking and second ranking fixed pledges that will be placed on our various holdings and rights in our subsidiaries Elbit Ultrasound (Luxembourg) B.V./S.ar.l (through which we hold a controlling stake in PC) and Elscint Holdings and Investments N.V. as well as any amounts which we shall be entitled to receive therefrom (including under all and any shareholders loans advanced by us to those companies, if any). Furthermore, our Articles of Association were amended such that (i) a decision by the Company to engage in a field of business that is new to the Company and its subsidiaries and is material to the Company requires the unanimous approval of all of the members of the Board present and lawfully entitled to vote at the relevant meeting and (ii) in certain events a person contemplating purchase of our shares shall be required to offer to acquire ordinary shares representing at least 10% of our voting rights in connection with such purchase.
|
|
·
|
In connection with the Debt Restructuring we issued 16,594,036 ordinary shares to Bank Hapoalim pursuant to the terms set forth in the Refinancing Agreement. Pursuant to the Refinancing Agreement the outstanding loan amount (approximately $48 million) will be repayable by the Company following a period of three years period from the closing (i.e, February 20, 2017) and will bear interest of LIBOR +3.8%, which will be payable quarterly, and an additional 1.3% which will be payable on the final maturity date (the “Loan”). In addition, pursuant to the Refinancing Agreement (i) first-ranking fixed charges will be placed on our holdings and other rights in certain of our subsidiaries holding our hotels in Romania and Belgium as collateral securing our debt to Bank Hapoalim under the Refinancing Agreement. Such charges shall be placed in addition to the existing securities that Bank Hapoalim held under the loan previously received from Bank Hapoalim, i.e., a first ranking pledge over an amount of 86 million shares of PC, representing approximately 29% of PC's outstanding shares and on our holdings (100%) in Elbit Fashion Ltd. (ii) in the event that the Loan is paid before May 31, 2014 Bank Hapoalim shall return to us, without consideration, 8,423,368 Ordinary Shares and (iii) we are subject to certain prepayment obligations in the event of prepayment of the aforementioned new notes or distribution. For further details regarding the Refinancing Agreement, please see the Form 6-K we filed on November 14, 2013.
|
|
·
|
As discussed under the activities of years 2011 and 2012 below, we granted Eastgate Property LLC (“Eastgate”) a warrant to purchase our ordinary shares, as subsequently amended (the “Warrant”). Pursuant to an understanding between us and Eastgate, in connection with the Debt Restructuring Eastgate exercised the Warrant for 1,924,215 ordinary shares immediately following the consummation of the Debt Restructuring, at which time the Warrant was terminated. For further details regarding the Warrant, please see the Form 6-K we filed on February 20, 2014.
|
|
·
|
Our unsecured debt prior to the entering into effect of the Debt Restructuring included approximately $12.8 million principal amount of bank debt held by Bank Leumi. In connection with the Debt Restructuring we issued to an escrow agent for the benefit of Bank Leumi approximately NIS 8.0 million (approximately $2.3 million) in principal amount of our Series H Notes, approximately NIS 3.9 million (approximately $1.1 million) in principal amount of our Series I Notes, and 9,090,122 ordinary shares. We have outstanding disputes with Bank Leumi with respect to the validity of certain pledges over accounts held by us at Bank Leumi and consequently, whether the debt we owe to Bank Leumi is classified as unsecured or secured. Upon the resolution of such disputes, these securities will be transferred to Bank Leumi or to us (or one of our subsidiaries).
|
|
·
|
On January 13, 2014 PC announced that its subsidiary (in which it holds approximately 70% of its voting power) had reached an agreement to sell its 50% equity stake in the Uj Udvar project in Budapest, Hungary. As a result of the transaction, PC received cash proceeds of ˆ2.4 million (NIS 11.2 million).
|
|
·
|
In February 2013 we announced that we would temporarily cease making all principal payments due under our Series A and Series B debentures and all interest payments due under all of our publicly-traded debentures; for a discussion of these announcements please see the Form 6-Ks we filed on February 5, 2013, and February 19, 2013, respectively. In March 2013
we entered into a letter of undertaking (the
“Letter of Undertaking”) with the trustees of the Company’s Series 1, C, D, E, F and G note holders
regarding our activities during an interim period, under which,
inter alia
, it was agreed that we and the entities controlled by us (excluding PC)
would not make any payments to our respective creditors, other than under certain circumstances.
For a discussion of the Letter of Undertaking, please see the Form 6-K we filed on March 21, 2013. For a discussion of the terms of the Debt Restructuring, please see "2014" above.
|
|
·
|
As described below in "2012", in August and November 2012, acting through our wholly owned subsidiary Elbit Imaging Financing Services, Limited Partnership (“Elbit Financing”), we entered into two bond structured transactions with two leading global financial institutions (the “Counterparties”). On February 20, 2013, the Counterparties notified us of the early termination of the transactions as a result of the decline in the market price of our outstanding debentures and consequent failure to meet the loan-to-value covenants under the agreements governing the transactions.
|
|
·
|
In March 2013, we received a letter from Bank Leumi demanding repayment within ten days of the outstanding balance of approximately $14.1 million (approximately NIS 49 million) due primarily under certain loans made by Bank Leumi to us
pursuant to a refinancing agreement dated May 5, 2011
. Bank Leumi stated that it was taking this action in light of our then-financial condition and our having informed Bank Leumi that we would not pay the principal and the interest due on March 29, 2013. Bank Leumi also informed us that it had placed a freeze on the Leumi Accounts (certain accounts maintained by us with Bank Leumi in which we held cash and trading securities in the amount of approximately NIS 8 million) until the outstanding amounts due are repaid. Bank Leumi also notified us that should such repayment not be made within ten days Bank Leumi was reserving its rights to take all actions necessary in order to protect its rights under the loan agreements including offsetting any amounts in the Leumi accounts against the loans.
Bank Leumi also claimed that it has certain pledges registered in its favor and therefore it is a secured creditor and should not be included in the Debt Restructuring. For a discussion of the treatment of our debt to Bank Leumi under the Debt Restructuring, please see " – 2014" above.
|
|
·
|
On May 29, 2013 PC successfully completed the sale of its 50% interest in an entity which mainly holds interests in an office complex project located in Pune, Maharashtra. The transaction valued the entity at ˆ33.4 million and, as a result, PC received gross cash proceeds of approximately ˆ16.7 million.
|
|
·
|
On June 6, 2013, we received a letter from Bank Hapoalim, demanding repayment within seven days of the outstanding balance of the loan owed to Bank Hapoalim under the March 31, 2011 Facility Agreement, without prejudicing its right under any other loan facility to which we are a party as a guarantor or otherwise. Bank Hapoalim stated that it was taking this action in light of our alleged breaches under the loan, including,
inter alia
, non-payment to Bank Hapoalim on March 31, 2013 of approximately $14.5 million, failure to satisfy certain financial covenants under the loan and adverse change in our financial position. On November 4, 2013, the Company had announced that the Company and Bank Hapoalim had reached general terms of agreement between the parties, and on November 12, 2013, we had announced certain amendments to the said general terms of agreement. On November 26, 2013, our unsecured financial creditors voted on the general terms of agreement to be entered into with Bank Hapoalim. At the Meeting, unsecured financial creditors holding approximately 70.6% of the aggregate voting power that had participated in the meeting voted in favor of the refinancing. On December 29, 2013 we entered into a new facility agreement with Bank Hapoalim based on the aforementioned general terms of agreement, and on February 20, 2014, the transactions under the agreement were consummated. For further discussion of the terms and the closing of the Refinancing Agreement, please see "2014" above.
|
|
·
|
In July 2013 PC completed the sale of 100% of its interest in an entity which holds the interest in a plot of land in Prague. The transaction values the entity at approximately ˆ1.9 million (NIS 9 million). The net cash consideration after deducting a liability to a third party amounted to ˆ1.3 million (NIS 6.2 million).
|
|
·
|
A subsidiary of PC was party to a loan with a commercial bank, secured by PC’s notes that PC had repurchased, that was due to be repaid in September 2013. Due to a rating downgrade that resulted in a loan covenant breach, PC entered into negotiations with the bank and the two parties agreed upon an early repayment of the loan that was consummated during the first half of 2013.
|
|
·
|
On October 31, 2013 the consortium of shareholders of Dream Island, in which PC holds a 43.5% stake, completed the sale of the Dream Island project land to the Hungarian State for approximately ˆ15 million. The proceeds of the transaction were used by the consortium to repay a proportion of a secured bank loan.
|
|
·
|
On November 14, 2013, PC reached an agreement to sell Koregaon Park Plaza, a retail and entertainment center located in Pune, India, subject to the satisfaction of certain closing conditions, including consent of the financing bank which as of the date of this annual report have yet to be obtained. The transaction values the center in the amount of ˆ40.3 million (NIS 192.9 million). Following the repayment of the outstanding related bank loan, PC will receive aggregate gross cash proceeds from the purchaser totaling approximately ˆ18.5 million (NIS 88.5 million), which will be paid to it in several installments. As of December 31, 2013, PC received an advance of approximately ˆ2.3 million (NIS 11.5 million) and is expected to collect the remaining consideration between years 2014 and 2016. It should be noted, however, that PC's counter party in this transaction is currently subject to certain governmental investigation (not relating to us) and that there is uncertainty as to its ability to continue to pursue the transaction.
|
|
·
|
PC announced on November 18, 2013 that it had filed for reorganization proceedings (preliminary suspension of payments) with the Dutch Court and submitted a restructuring plan to the Dutch Court. Further to that announcement, PC announced that the Dutch Court had granted its application for preliminary suspension of payment proceedings. PC noted further that in order to resolve its liquidity situation it had filed with the Dutch Court a restructuring plan proposed to its creditors. On March 26, 2014 PC announced that it has agreed to make certain commercial amendments to such plan, which it intends to submit to the Dutch Court. The Amended PC Plan proposes,
inter alia
, that all principal payments due during the years 2013-2015 of any unsecured debt shall be deferred for three years from the date of approval of the Amended PC Plan by the Court (“Approval Date”). If within two years from the Approval Date PC manages to repay 50% of such unsecured debt, then the remaining principal payments shall be deferred for an additional one year. Under the Amended PC Plan, following the removal of the suspension of payments order by the Dutch Court, PC will have to assign 75% of the net proceeds received from the sale or refinancing of any of its assets to early repayment of its unsecured debt, to be allocated among the holders of such unsecured debt. PC will be allowed to execute actual investments only if its cash reserves contain an amount equal to general and administrative expenses and interest payments for such unsecured debt for a six-month period. In addition, the Amended PC Plan includes other provisions such as: compensation to the note holders by increasing the interest rate on the notes, issuance of shares to PC’s unsecured financial creditors equal to 13.5% of PC’s share capital, placing a negative pledge on PC's assets, certain limitations on distribution of dividends and incurring of new indebtedness, financial covenants and undertakings of PC with respect to the sale and financing of certain projects and investment in new projects, and commitment to publish quarterly financial statements as long as such unsecured debt is outstanding. The Amended Plan shall be contingent upon a cash injection of approximately ˆ20 million in PC, by way of a rights issuance, and we, PC, its directors and officers shall be fully released from claims. During the restructuring process PC’s creditors will be subject to a moratorium. In addition, PC noted that it will approach its creditors to seek approval for the Amended PC Plan. Pursuant to PC's announcements, the Dutch Court has determined that the PC creditors meeting for the purpose of voting on the Amended PC Plan will take place on June 26, 2014 at the district court in Amsterdam. For a discussion of PC’s reorganization proceedings, please see the Forms 6-K we filed on November 14, 2013, November 20, 2013 and November 25, 2013. For a discussion regarding the proposed amendment to the restructuring plan – see “ - 2014” above.
|
|
·
|
On December 6, 2012, InSightec completed its issuance of Series C preferred shares for an aggregate amount of $30.9 million, which included $27.6 million invested by GE Healthcare, a division of the General Electric Company (“GE”) and $3.9 million invested by other investors. According to the terms of the transaction, GE and us converted all the existing shareholders loans that had been granted to InSightec into InSightec's series B-1 preferred shares in accordance with the terms of those loans. The transaction reflected a post money valuation of InSightec of approximately $105.9 million (or pre-money valuation of $75 million and following the conversion of the loans as described above). As part of the transaction, on October 17, 2012, InSightec and GE entered into a Technology, Co-operation, and Distribution Agreement (the "Cooperation Agreement") relating,
inter alia
, to product exclusivity, cooperation with respect to the development and sale of the parties' complementary products, distribution, marketing and sales, intellectual property rights and licenses, sale terms and conditions, and similar items. Under the Cooperation Agreement, InSightec is prohibited from developing systems that would be compatible with MRI systems manufactured by companies other than GE. Following the closing of the transaction, our holdings in InSightec (through our subsidiary Elbit Medical 90%) were reduced to approximately 48.2% (approximately 40.7% on a fully diluted basis). After completion of the transaction Elbit Medical no longer has the right to appoint the majority of InSightec's board members and therefore ceased to consolidate InSightec's financial statements, and its investments in InSightec are presented based on the equity method.
|
|
·
|
In November 2012 PC's board of directors approved the extension of the repurchase of its series A through B Notes in an amount of up to NIS 750 million. During 2012, PC purchased a total of NIS 271 million par value of its debentures, for a total consideration of NIS 247 million.
|
|
·
|
In August 2012 we (through our wholly owned subsidiary Elbit Financing) entered into a NIS 75 million bond structured transaction with a Counterparty, pursuant to which we purchased a NIS denominated zero-coupon credit linked note due to mature on October 2, 2013 (the “CLN”) from the Counterparty or its affiliate. The CLN referenced a portfolio of the Company’s bonds (having a market value of NIS 75 million). The bond portfolio was purchased by us under the Company's bond repurchase program that was announced on May 23, 2011 and in the framework of the transaction it sold the bond portfolio to the Counterparty. In consideration, the Counterparty paid us the market value of the bond portfolio and arranged for the issuance of the CLN at an issue price of NIS 37.5 million.
|
|
·
|
During the terms of the respective transactions, all the proceeds derived from the bond portfolio (principal and interest) were to be retained by the Counterparty. Immediately following the scheduled respective termination date of each of the transactions, subject to no early termination event having occurred the Counterparty was to deliver to us the remaining, unamortized portion of the respective bond portfolio. Under the terms of the respective transactions, an early termination of the transaction could occur upon a trigger event linked to a decrease in the market value of the respective bond portfolio below a pre-defined threshold. For a discussion of the termination of this transaction, please see " – 2013" above.
|
|
·
|
In June 2012 certain indirect subsidiaries of EPN GP, LLC and EPN EDT Holdings II, LLC (the “EPN Group”) sold 47 of the shopping centers it held to BRE DDR Retail Holdings LLC for a purchase price of $1.43 billion. On the closing of the transaction all the property level financing was repaid by the EPN Group or assumed by the buyer. The closing of the transaction took place in July 2012. In addition, in July 2012, the two remaining shopping centers were sold for an aggregate amount of $41 million.
|
|
·
|
On April 5, 2012 the Company and Eastgate amended the warrant granted in connection with the $30 million term loan agreement dated September 21, 2011, with effect as of March 22, 2012, pursuant to which we agreed to cancel the proposed increase in the number of shares issuable under the warrant on and after such date and to reduce the exercise price from $3.00 per share to zero. The amendment also contained appropriate modifications to the adjustment provisions of the warrant as a result of the foregoing changes. For a discussion of the exercise of the warrant, see “ - 2014” above.
|
|
·
|
In March 2012 one of our wholly owned indirect subsidiaries entered into a share purchase agreement with PPHE Hotel Group Limited (“PPHE,”) for the sale of our holdings in certain subsidiaries, which owned a 50% interest in the following hotels in the Netherlands: the Park Plaza Victoria Amsterdam Hotel, the Park Plaza Utrecht Hotel, the arthotel Amsterdam and the Park Plaza Airport Hotel. These hotels were jointly owned by us and PPHE and were managed by PPHE. The transaction reflected an asset value of ˆ169 million for all four hotels. The total net consideration payable to us was ˆ26.5 million. The consideration was paid as follows: (i) ˆ23 million in cash; (ii) PPHE issued and allotted to us 700,000 ordinary shares of PPHE, with a then-current market price of approximately ˆ2.0 million, based on the quotation of such shares’ price on the London Stock Exchange as of March 30, 2012; and (iii) an additional payment in the aggregate amount of up ˆ1.5 million that shall be made on the fourth anniversary of the closing and shall be subject to certain adjustments, based on the PPHE shares’ market price, as set forth in the agreement. The total profit generated from the sale of the hotels amounted to approximately NIS 188 million, out of which we recognized NIS 134 million in shareholders’ equity due to the application of the revaluation model and NIS 54 million in the income statement.
|
|
·
|
In January 2012 we and Elbit Trade & Retail Ltd. ("Elbit Trade"), previously a wholly-subsidiary of ours, entered into an agreement with Gottex Models Ltd. (“Gottex”) for the sale of all of our shares in Elbit Trade and all of its interests in GB Brands, Limited Partnership (“GB Brands”), which is the franchisee of the Gap brand in Israel. The transaction closed in April 2012. The purchase price paid by Gottex under the agreement was NIS 25 million, plus the agreed value of the Gap inventory as of the closing date and adjustments based on the agreed value of the working capital attributed to the Gap activity as of the closing date. We recorded a gain in the amount of NIS 9.4 million.
|
|
·
|
In June 2012, a fire event occurred at a shopping center of PC’s subsidiary in Pune, India, which resulted in a temporary close-down of the shopping center.
|
|
·
|
On February 23, 2012, InSightec and InSightec’s wholly owned subsidiary concluded a series of agreements with GE through its healthcare division (“GEHC”) pursuant to which GEHC agreed to provide financing to InSightec in the form of convertible notes up to a total of $13.75 million, bearing interest at a rate of 6% per annum or a rate equivalent to the interest applicable to the financing provided by us and Elbit Medical. The convertible notes will be due and payable by October 1, 2016, and will be convertible into Series B-1 Preferred Shares of InSightec. In addition, we and Elbit Medical entered into a series of agreements with InSightec and GEHC pursuant to which, among other things, upon Elbit Medical obtaining the approval of its shareholders the financing granted to InSightec by us and Elbit Medical during 2010 and 2011 will be amended to provide similar loan terms and security mechanisms as set forth in this funding agreement, so that Elbit Medical and us will receive convertible notes convertible on the same terms and up to the same amounts as the GEHC notes. The loans and convertible notes issued to GEHC and Elbit Medical and the note that will be issued to us will be secured,
pari passu
, by floating charges over the assets of InSightec and its wholly owned subsidiary. The loans were converted to Series B-1 shares as part of the closing of the InSightec Series C preferred shares issuance discussed above.
|
|
·
|
In November 2011, PC opened the Torun Plaza in Torun, Poland, a city of 200,000 inhabitants located in the north-west of Poland. This commercial and entertainment center comprises 40,000 square meters of gross lettable area spread over two floors with approximately 1,100 parking spaces. The center includes an eight screen cinema, fantasy park entertainment center as well as over 120 shops with international and local brands.
|
|
·
|
On October 3, 2011, our 77% held subsidiary, S.C. Bucuresti Turism S.A ("BUTU") completed a refinancing of its Radisson Blu Hotel located in Bucharest, Romania. According to the facilities agreement, a leading international European bank granted BUTU a loan of up to ˆ71.5 million to be drawn down in two tranches, of which Tranche A in the amount of approximately ˆ62.5 million was drawn down on September 29, 2011. The proceeds of the drawn down of Tranche A were used, inter alia, to repay BUTU's current outstanding bank facility and to repay to us our shareholder loans in the amount of approximately ˆ25 million. Tranche B was not drawn down by BUTU and subsequently expired.
|
|
·
|
On September 22, 2011, PC undertook that it would not make any further distributions during 2011 other than a distribution of ˆ30 million that was subsequently made on September 23, 2011, pursuant to an agreement entered into between PC and its Series A and Series B bondholders. Furthermore, PC undertook in the agreement that distributions in the years 2012 and 2013 will be subject to the following conditions:
|
|
o
|
any distribution of dividends (including a repurchase of shares that is not at an attractive price to PC) will not exceed ˆ30 million;
|
|
o
|
any distribution of dividends will be derived only from the net cash flow derived from the realization of assets at a rate which will not exceed 50% of the cash flow from the realization of the foregoing assets;
|
|
o
|
if a distribution is made and the bonds meet certain agreed upon average yield rates, PC will maintain certain reserve amounts secured in favor of the bondholders which may be used to repurchase or repay the bonds; and
|
|
o
|
if a distribution is made and the bonds meet certain agreed upon average yield rates, PC will be entitled to make distributions between ˆ30 million and ˆ50 million and it will maintain an amount equal to the distribution amount exceeding ˆ30 million as a reserve secured in favor of the bondholders which may be used to repurchase or repay the bonds.
|
|
·
|
On September 21, 2011, our wholly owned indirect subsidiary, Elbit USA, LLC, entered into a secured term loan agreement (the “Term Loan Agreement”) with Eastgate, for a term loan in the amount of $30 million (the "Term Loan"). As part of and in connection with the Term Loan, we granted to Eastgate a warrant to purchase our ordinary shares at an exercise price of $3.00 per share payable in cash, in exchange for the cancellation of debt or by forfeiting shares having a market value equal to the exercise price (i.e., "cashless exercise"), during a two-year period commencing on March 31, 2012. It was further agreed that if the Term Loan is repaid by March 22, 2012, six months from the closing, the warrant would entitle Eastgate to purchase up to 3.3% of our outstanding shares at the date of exercise. Otherwise, the warrant would entitle Eastgate to purchase up to 9.9% of our outstanding shares at the date of exercise. The exercise price and/or number of shares issuable upon exercise of the warrant are subject to adjustment for certain corporate events, transactions and dilutive issuances of securities. On September 22, 2011, we filed a prospectus supplement with the SEC under our shelf registration statement dated March 14, 2011, to register the warrant and up to 3,000,000 ordinary shares which may be issuable upon the exercise of the warrant. The Warrant was amended to enable purchase up to 3.3% of our fully diluted share capital (subject to certain exceptions) at the time of exercise of the Warrant, for no consideration, until March 31, 2014. Pursuant to an understanding between us and Eastgate, in connection with the Debt Restructuring, on February 20, 2014 Eastgate exercised the Warrant for 1,924,215 ordinary shares immediately following the consummation of the Debt Restructuring, at which time the Warrant was terminated.
|
|
·
|
On September 19, 2011, EDT Retail Trust, a trust traded on the Australian Stock Exchange (“EDT”), distributed an interim dividend payment of $26 million. Elbit Plaza USA, L.P. (“Elbit Plaza USA”) received a total distribution amount of $11.8 million. Each of ours and PC’s share in such distribution was approximately $5.9 million.
|
|
·
|
On September 23, 2011, PC paid an interim cash dividend payment of ˆ30 million to its shareholders, of which we received ˆ18.7 million, out of which ˆ8.7 million was used to serve our debt to an Israeli bank under a loan agreement dated March 2011 pursuant to which we pledged 29% of PC's outstanding shares.
|
|
·
|
On July 14, 2011, EPN Group concluded the off-market takeover bid made for all of the units in EDT not already held by it. As a result of the purchases of EDT’s units during the offer period, EPN Group increased its interest in EDT from approximately 47.8% to approximately 96.4%. In August 2011 EPN Group completed the compulsory acquisition of the remaining EDT units and the EPN Group became the holder of 100% of the outstanding units of EDT, following which EDT was removed from the official list of the Sydney Stock Exchange and was voluntarily liquidated (while transferring the US REITs it held to the EPN Group).
|
|
·
|
In May 2011, PC's board of directors approved the repurchase of up to NIS 150 million of its series A through B Notes, to be made from time to time in the open market. During 2011, PC purchased an additional total of NIS 168 million par value of its debentures (with adjusted value of NIS 194 million), for a total consideration of NIS 152 million.
|
|
·
|
In May 2011, our board of directors approved the repurchase of up to NIS 150 million of our Series A through G Notes, to be made from time to time in the open market. During 2011, we purchased NIS 67.7 million par value of our notes for an amount of approximately NIS 53 million.
|
|
·
|
In March 2011, we entered into a new financing agreement (subsequently amended) with an Israeli bank in the amount of $70 million, replacing the previous financing agreement.
|
|
·
|
In March 2011, we issued additional unsecured non-convertible Series D Notes to investors in Israel by expanding the existing series in an aggregate principal amount of approximately NIS 96 million for gross proceeds of approximately NIS 108 million.
|
|
·
|
On February 9, 2011, we filed a shelf registration statement on Form F-3 with the SEC, which became effective on March 14, 2011, pursuant to which we may offer and sell from time to time a combination of ordinary shares, senior and subordinated debt securities, warrants and units in one or more offerings up to a total dollar amount of $300,000,000.
|
|
·
|
In January 2011, PC issued additional Series A and B Notes for an aggregate consideration of approximately NIS 300 million.
|
|
·
|
Adjustment in respect of the time of the transaction. Market conditions at the time of the sales transaction of a comparable property may differ from those on the valuation date of the property being valued. Factors that impact market conditions include rapidly appreciating or depreciating property values, changes in tax laws, building restrictions or moratoriums, fluctuations in supply and demand, or any combination or forces working in concert to alter market conditions from one date to another.
|
|
·
|
Adjustment in respect of asking price and condition of payment. The special motivations of the parties to the transaction in many situations can affect the prices paid and even render some transactions as non-market value transactions. Examples of special conditions of sale include a higher price paid by a buyer because the parcel has synergistic, or marriage, value; a lower price paid because a seller was in a hurry to conclude the sale; a financial, business, or family relationship between the parties involved in the transaction, unusual tax considerations; lack of exposure of the property in the (open) market; or the prospect of lengthy litigation proceedings.
|
|
·
|
Adjustment in respect of size, shape and surface area. Where the physical characteristics of a comparable property vary from those of the subject property, each of the differences is considered, and the adjustment is made for the impact of each of these differences on value.
|
|
·
|
Adjustment in respect of location. The locations of the comparable sale properties and the subject property are compared to ascertain whether location and the immediate environs are influencing the prices paid. The better the location a property is located in, the more such location is worth; and conversely, a worse location would result in lower value. An adjustment is made to reflect such differences based on the valuator's professional experience. Extreme location differences may indicate that a transaction is not truly comparable and are subsequently disqualified.
|
|
·
|
Assuming a transaction/price between willing buyer and a willing seller, without duress and an appropriate time to market the property to maximize price;
|
|
·
|
Capitalization rates used to value the asset, market rental levels and lease expirations;
|
|
·
|
Average room rate of the hotels;
|
|
·
|
Discounted cash flow models;
|
|
·
|
Available sales evidence; and
|
|
·
|
Comparisons to valuation professionals performing valuation assignments across the market.
|
A.
|
Operating Results
|
Year ended December 31
|
||||||||||||||||
2 0 1 3
|
2 0 1 2
|
2 0 1 1 (*) | 2 0 1 3 | |||||||||||||
Convenience
translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
(Except for per-share data)
|
||||||||||||||||
Revenues and gains
|
||||||||||||||||
Revenues
|
||||||||||||||||
Revenues from sale of commercial centers
|
8,614 | 67,594 | 3,525 | 2,482 | ||||||||||||
Revenues from Hotels operations and management
|
202,791 | 206,746 | 286,548 | 58,424 | ||||||||||||
Revenues from fashion merchandise and other
|
149,192 | 144,141 | 185,082 | 42,982 | ||||||||||||
Total revenues
|
360,597 | 418,481 | 475,155 | 103,888 | ||||||||||||
Gains and other
|
||||||||||||||||
Rental income from Commercial centers
|
129,748 | 147,185 | 111,745 | 37,381 | ||||||||||||
Gain from changes of shareholding in investees
|
- | 9,369 | - | - | ||||||||||||
Gain from sale of real estate assets
|
- | 53,875 | - | - | ||||||||||||
Total revenues and gains
|
129,748 | 210,428 | 111,745 | 37,381 | ||||||||||||
Total revenues and gains
|
490,345 | 628,909 | 586,900 | 141,269 | ||||||||||||
Expenses and losses
|
||||||||||||||||
Commercial centers
|
124,737 | 213,367 | 159,626 | 35,937 | ||||||||||||
Hotels operations and management
|
179,137 | 186,760 | 240,784 | 51,610 | ||||||||||||
Cost of fashion merchandise and other
|
142,417 | 154,220 | 211,743 | 41,031 | ||||||||||||
General and administrative expenses
|
60,643 | 48,771 | 61,857 | 17,471 | ||||||||||||
Share in losses of associates, net
|
339,030 | 102,127 | 7,568 | 97,677 | ||||||||||||
Financial expenses
|
337,423 | 187,667 | 164,001 | 118,088 | ||||||||||||
Financial income
|
(3,930 | ) | (28,303 | ) | (65,571 | ) | (5,834 | ) | ||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
68,407 | 50,229 | (275,537 | ) | 3,536 | |||||||||||
Write-down, charges and other expenses, net
|
841,462 | 302,093 | 290,276 | 242,424 | ||||||||||||
2,089,326 | 1,216,931 | 794,747 | 601,940 | |||||||||||||
Loss before income taxes
|
(1,598,981 | ) | (588,022 | ) | (207,847 | ) | (460,671 | ) | ||||||||
Income tax expenses (tax benefit)
|
(31,937 | ) | (9,212 | ) | 63,283 | (9,201 | ) | |||||||||
Loss from continuing operations
|
(1,567,044 | ) | (578,810 | ) | (271,130 | ) | (451,470 | ) | ||||||||
Profit from discontinued
operations, net
|
2,034 | 94,826 | 24,101 | 586 | ||||||||||||
Profit (loss) for the year
|
(1,565,010 | ) | (483,984 | ) | (247,029 | ) | (450,884 | ) |
(*)
|
Amounts for the year ended December 31, 2011 were not amended due to application of IFRS 11 and therefore are presented as originally reported. See above “Presentation method of financial statements”.
|
Year ended December 31
|
||||||||||||||||
2 0 1 3
|
2 0 1 2
|
2 0 1 1 (*) | 2 0 1 3 | |||||||||||||
Convenience
translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
(Except for per-share data)
|
||||||||||||||||
Attributable to:
|
||||||||||||||||
Equity holders of the Company
|
(1,155,645 | ) | (315,746 | ) | (264,919 | ) | (332,945 | ) | ||||||||
Non-controlling interest
|
(409,365 | ) | (168,238 | ) | 17,890 | (117,939 | ) | |||||||||
(1,565,010 | ) | (483,984 | ) | (247,029 | ) | (450,884 | ) | |||||||||
Loss from continuing operations
|
||||||||||||||||
Equity holders of the Company
|
(1,157,404 | ) | (414,126 | ) | (284,610 | ) | (333,452 | ) | ||||||||
Non-controlling interest
|
(409,640 | ) | (164,684 | ) | 13,480 | (118,018 | ) | |||||||||
(1,567,044 | ) | (578,810 | ) | (271,130 | ) | (451,470 | ) | |||||||||
Profit from discontinued operation, net
|
||||||||||||||||
Equity holders of the Company
|
1,760 | 98,380 | 19,691 | 507 | ||||||||||||
Non-controlling interest
|
274 | (3,554 | ) | 4,410 | 79 | |||||||||||
2,034 | 94,826 | 24,101 | 586 | |||||||||||||
Earnings (loss) per share - (in NIS)
|
||||||||||||||||
Basic earnings (loss) per share:
|
||||||||||||||||
From continuing operation
|
(46.49 | ) | (16.64 | ) | (11.44 | ) | (13.39 | ) | ||||||||
From discontinued operations
|
0.07 | 3.95 | 0.79 | 0.02 | ||||||||||||
(46.42 | ) | (12.69 | ) | (10.65 | ) | (13.37 | ) | |||||||||
Diluted earnings (loss) per share:
|
||||||||||||||||
From continuing operation
|
(46.49 | ) | (16.64 | ) | (11.44 | ) | (13.39 | ) | ||||||||
From discontinued operations
|
0.07 | 3.95 | 0.79 | 0.02 | ||||||||||||
(46.42 | ) | (12.69 | ) | (10.65 | ) | (13.37 | ) |
|
(i)
|
Revenues from sale of commercial centers decreased to NIS 8 million ($2 million) in 2013 compared to NIS 68 million in 2012. In 2013 the revenues were attributable to sale of a plot by PC in the Czech Republic. In 2012, the revenues were attributable to the sale of land by PC in Bulgaria.
|
|
(ii)
|
Revenues from hotel operations and management decreased to NIS 203 million ($58 million) in 2013 compared to NIS 207 million in 2012. The decrease was mainly attributable to a decrease in revenues from our hotel in Romania offset by an increase in the revenues from our hotels in Belgium. The average occupancy rate decreased from 75% in 2012 to 73% in 2013 and the average room rate increased from ˆ91 in 2012 to ˆ95 in 2013.
|
|
(iii)
|
Revenues from fashion merchandise and other increased to NIS 149 million ($43 million) in 2013 compared to NIS 144 million in 2012. Revenues in 2013 include solely the operations of the Mango brand while the revenues in 2012 include revenues of the Mango brand (NIS 127 million) and revenues of the GAP brand (NIS 17 million) until April 2012 (the date of its sale by us). The increase of NIS 22 million ($6 million) in revenues attributed to Mango operations in 2013 compared to 2012 was attributed to an improvement in the revenues of existing stores as well as the opening of new stores during 2013.
|
|
(i)
|
Rental income from commercial centers decreased to NIS 130 million ($37 million) in 2013 compared to NIS 147 million in 2012. The decrease was mainly attributable to the closing of a certain location of PC's Fantasy Park operations during 2013, which resulted in a decrease of NIS 18 million ($5 million) in income. PC's commercial centers operations contributed income of NIS 113 million ($33 million) in each of the years 2013 and 2012 attributable to the operations of six operating commercial centers through the years. The average occupancy rate in 2013 was 86% - 100% compared to 80%-98% in 2012.
|
|
(ii)
|
Gain from a sale of real estate assets in 2013 was NIS 0 as compared to gain of NIS 54 million attributable to the sale of four Dutch hotels in March 2012.
|
|
(iii)
|
Gain from a change of shareholding in investee in 2013 was NIS 0 as compared to NIS 9 million attributable to the sale of the retail activity of GAP in April 2012.
|
|
(i)
|
Expenses of commercial and entertainment centers decreased to NIS 125 million ($36 million) in 2013 compared to NIS 213 million in 2012. The expenses in 2012 included an amount of NIS 68 million attributable to the cost of plot which was sold in Bulgaria during 2012 compared to cost of NIS 10 million ($2.9 million) in 2013.
|
|
(ii)
|
Cost of hotel operations and management decreased to NIS 179 million ($52 million) in 2013 compared to NIS 187 million in 2012, mainly attributable to the decrease in activity as discussed above.
|
|
(iii)
|
Cost of fashion merchandise
and other
decreased to NIS 142 million in 2013 compared to NIS 154 million in 2012. The decrease resulted from the sale of the retail activity of GAP in April 2012 offset by an increase resulted from the increase in Mango activity as discussed above.
|
|
(iv)
|
General and administrative expenses increased to NIS 61 million ($18 million) in 2013 compared to NIS 49 million in 2012. General and administrative expenses less non-cash expenses amounted to NIS 51 million ($15 million) in 2013 compared to NIS 35 million in 2012. Such increase in 2013 resulted mainly from cost and expenses relating to the process of consummating the Debt Restructuring.
|
|
(v)
|
Share in losses of associates, net increased to NIS 339 million ($98 million) in 2013 compared to NIS 102 million in 2012. Such losses in 2013 resulted mainly from write down of trading properties by our joint-venture entities in India as well as losses attributable to the operation of our medical activity. The losses in 2012 were mainly from write down of trading property by joint ventures entities of PC operating in Eastern Europe.
|
|
(vi)
|
Financial expenses increased to NIS 337 million ($97 million) in 2013 compared to NIS 188 million in 2012. Such amount includes:
|
|
(vii)
|
Financial income decreased to NIS 4 million ($1 million) in 2013 compared to NIS 28 million in 2012. Such decrease was attributable mainly to a decrease in the scope of our deposit and receivable during the year as well as a decrease in the interest rate.
|
|
(viii)
|
Losses from changes in fair value of financial instruments amounted to NIS 68 million ($20 million) in 2013 compared to a gain of NIS 50 million in 2012. This decrease was mainly attributable to the following:
|
|
(i)
|
Changes in fair value of financial instruments (mainly PC's notes which are measured at fair value through profit and loss) amounted to NIS 60 million in 2013 compared to a gain of NIS 98 million in 2012; and
|
|
(ii)
|
Loss from change in fair value of derivatives, embedded derivative and marketable securities (mainly swap transactions executed mainly by PC in respect of its notes) amounted to a loss of NIS 8 million in 2013 compared to loss in the amount of NIS 48 million in 2012.
|
|
(ix)
|
Write-down, charges and other expenses, net, increased to NIS 841 million ($242 million) in 2013 compared to NIS 302 million in 2012. The write-down in 2013 was attributable to:
|
|
i.
|
Write-down and impairment of PC's trading property, advances on account of trading properties and investment property in the amount of NIS 615 million ($177 million);
|
|
ii.
|
Write-down of our trading property and advances on account of trading property in India in the total amount of NIS 132 million ($38 million);
|
|
iii.
|
Impairment of goodwill related to our hotels business and to our hotels under development in the total amount of NIS 56 million($16 million); and
|
|
iv.
|
Initiation and other expenses, net in the total amount of NIS 38 million ($11 million)
|
Segment
|
Hotels
|
Commercial Centers
|
Medical Industries
|
Fashion Apparel
|
Residential
|
Other and Allocations
|
Total
|
|||||||||||||||||||||
Revenues
|
203 | 8 | 75 | 149 | - | (75 | ) | 360 | ||||||||||||||||||||
Rental income from commercial centers
|
- | 154 | - | - | - | (24 | ) | 130 | ||||||||||||||||||||
Gain from sale of real estate assets
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Gain from loss of control over a subsidiary
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Total revenues and gains
|
203 | 162 | 75 | 149 | - | (99 | ) | 490 | ||||||||||||||||||||
Costs and expenses
|
179 | 132 | 73 | 142 | 300 | (372 | ) | 454 | ||||||||||||||||||||
Research and development expenses
|
- | - | 42 | - | - | (42 | ) | - | ||||||||||||||||||||
Other expenses (income), net
|
56 | 613 | - | - | 132 | 32 | 833 | |||||||||||||||||||||
Segment profit (loss)
|
(32 | ) | (582 | ) | (40 | ) | 7 | (432 | ) | 282 | (797 | ) | ||||||||||||||||
Financial expenses (income), net
|
(27 | ) | (51 | ) | (1 | ) | (1 | ) | - | (1 | ) | (81 | ) | |||||||||||||||
Share in losses of associates, net
|
- | - | 1 | - | - | (340 | ) | (339 | ) | |||||||||||||||||||
Unallocated general and administrative expenses
|
(61 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(257 | ) | ||||||||||||||||||||||||||
Financial income
|
4 | |||||||||||||||||||||||||||
Changes in fair value of financial instruments measured at FVTPL
|
(68 | ) | ||||||||||||||||||||||||||
Loss before income taxes
|
(1,599 | ) | ||||||||||||||||||||||||||
Income taxes
|
32 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(1,567 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
2 | |||||||||||||||||||||||||||
Loss for the year
|
(1,565 | ) |
|
(i)
|
Revenues from sale of commercial and entertainment centers increased to NIS 68 million in 2012 compared to NIS 4 million in 2011. In 2012 PC consummated the sale of land in Bulgaria which generated revenues of NIS 68 million.
|
|
(ii)
|
Revenues from hotel operations and management decreased to NIS 206 million in 2012 compared to NIS 286 million in 2011. The decrease was mainly attributable to the sale of the four Dutch hotels in March 2012. This decrease was partially set off by an increase in the revenues from our hotels in Belgium and Romania. The average occupancy rate in these hotels was approximately 75% in 2012 and 72% in 2011, however the average room rate decreased from ˆ92 in 2011 to ˆ91 in 2012 for an average number of rooms of 1,026 in 2011 and 2012.
|
|
(iii)
|
Revenues from the sale of fashion retail and other decreased to NIS 144 million in 2012 compared to NIS 185 million in 2011. The decrease was mainly attributable to the sale of the retail activity of GAP in April 2012, partially offset by the increase in the revenues attributable to the activity of Mango. The same store revenues in Mango amounted to NIS 126 million in 2012 compared to NIS 106 million in 2011.
|
|
(i)
|
Rental income from commercial centers increased to NIS 147 million in 2012 compared to NIS 112 million in 2011 as a result of the operation of six centers in 2012, of which six operated throughout the year, compared to the operation of five centers in 2011, four of which operated throughout the year (excluding income in respect of one commercial center which under IFRS 11 is accounted for under the equity method). The increase in revenues was also due to the increase in the average occupancy rates from 78%-90% in 2011 to 80%-98% in 2012.
|
|
(ii)
|
Gain from a sale of real estate assets increased to NIS 54 million compared to nil in 2011 attributable to the sale of four Dutch hotels in March 2012.
|
|
(iii)
|
Gain from a sale of shareholding in investee increased to NIS 9 million compared to nil in 2011 attributable to the sale of the retail activity of GAP in April 2012.
|
|
(i)
|
Expenses of commercial and entertainment centers increased to NIS 213 million in 2012 compared to NIS 160 million in 2011 as a result of the operation of six commercial centers in 2012 compared to the operation of four commercial centers in 2011 as discussed above (excluding expenses in respect of one commercial center which under IFRS 11 is accounted for under the equity method). In addition, expenses in 2012 included NIS 68 million attributable to the sale of plots of land in Bulgaria.
|
|
(ii)
|
Cost of hotel operations and management decreased to NIS 186 million in 2012 compared to NIS 241 million in 2011. The decrease was mainly attributable to the sale of the four Dutch hotels in March 2012 as discussed above.
|
|
(iii)
|
Cost of fashion apparel
and other
decreased to NIS 154 million in 2012 compared to NIS 212 million in 2011. The decrease resulted from the sale of the retail activity of GAP in April 2012.
|
|
(iv)
|
General and administrative expenses decreased to NIS 49 million in 2012 compared to NIS 62 million in 2011. General and administrative expenses less non-cash expenses amounted to NIS 35 million in 2012 compared to NIS 37 million in 2011.
|
|
(v)
|
Share in losses of associates, net increased to NIS 102 million in 2012 compared to NIS 8 million in 2011. The share in losses in 2012 resulted mainly from write-down of trading property by PC's joint venture entities, which was included in these paragraphs as results of the implementation of IFRS 11.
|
|
(vi)
|
Financial expenses increased to NIS 188 million in 2012 compared to NIS 164 million in 2011. Such amount includes:
|
|
(a)
|
interest and CPI-linked borrowings in the amount of NIS 379 million in 2012 compared to NIS 464 million in 2011;
|
|
(b)
|
loss from foreign currency translation differences and other in the amount of NIS 33 million in 2012 compared to a gain in the amount of NIS 38 million in 2011;
|
(c)
|
gain from buy-back of notes in the amount of NIS 113 million in 2012 compared to NIS 64 million in 2011; and
|
(d)
|
financial expenses capitalized to qualified assets in the amount of NIS 112 million in 2012 compared to NIS 198 million in 2011.
|
|
(vii)
|
Financial income decreased to NIS 28 million in 2012 compared to NIS 66 million in 2011. Such decrease was attributable mainly to a decrease in the scope of our deposit and receivable during the year as well as a decrease in the interest rate.
|
|
(viii)
|
Losses from changes in fair value of financial instruments amounted to NIS 50 million in 2012 compared to a gain of NIS 276 million in 2011. This decrease was mainly attributable to the following:
|
|
(i)
|
Loss from changes in fair value of financial instruments (measured at fair value through profit and loss (mainly PC's notes)) amounted to NIS 98 million in 2012 compared to a gain of NIS 353 million in 2011; and
|
|
(ii)
|
Gain from change in fair value of derivatives, embedded derivative and marketable securities (mainly swap transactions) executed by PC in respect of its notes amounted to NIS 48 million in 2012 compared to loss in the amount of NIS 77 million in 2011.
|
|
(ix)
|
Write-down, charges and other expenses, net, increased to NIS 302 million in 2012 compared to NIS 290 million in 2011. The increase was attributable to the write-down in PC's trading property in Eastern Europe in the amount of NIS 301 million in 2012 compared to NIS 283 million in 2011.
|
Segment
|
Hotels
|
Commercial Centers
|
Medical Industries*
|
Fashion Apparel
|
Residential
|
Other and Allocations
|
Total
|
|||||||||||||||||||||
Revenues
|
223 | 125 | 69 | 143 | 2 | (171 | ) | 391 | ||||||||||||||||||||
Rental income from commercial centers
|
- | 175 | - | - | - | - | 175 | |||||||||||||||||||||
Gain from sale of real estate assets
|
54 | - | - | - | - | - | 54 | |||||||||||||||||||||
Gain from loss of control over a subsidiary
|
- | - | 217 | 9 | - | (217 | ) | 9 | ||||||||||||||||||||
Total revenues and gains
|
277 | 300 | 286 | 152 | 2 | (388 | ) | 629 | ||||||||||||||||||||
Costs and expenses
|
203 | 384 | 70 | 155 | 10 | (255 | ) | 567 | ||||||||||||||||||||
Research and development expenses
|
- | - | 41 | - | - | (41 | ) | - | ||||||||||||||||||||
Other expenses (income), net
|
(7 | ) | 294 | - | - | - | 2 | 289 | ||||||||||||||||||||
Segment profit (loss)
|
81 | (378 | ) | 175 | (3 | ) | (8 | ) | (95 | ) | (228 | ) | ||||||||||||||||
Financial expenses (income), net
|
33 | 47 | 1 | 1 | - | - | (82 | ) | ||||||||||||||||||||
Share in losses of associates, net
|
- | - | (8 | ) | - | - | (94 | ) | (102 | ) | ||||||||||||||||||
Unallocated general and administrative expenses
|
(49 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(105 | ) | ||||||||||||||||||||||||||
Financial income
|
28 | |||||||||||||||||||||||||||
Changes in fair value of financial instruments measured at FVTPL
|
(50 | ) | ||||||||||||||||||||||||||
Loss before income taxes
|
(588 | ) | ||||||||||||||||||||||||||
Income taxes
|
9 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(579 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
95 | |||||||||||||||||||||||||||
Loss for the year
|
(484 | ) |
B.
|
Liquidity and Capital Resources
|
|
·
|
Cancellation of our unsecured financial debt subject matter of the Debt Restructuring as of such date (subject to the pending dispute with Bank Leumi);
|
|
·
|
509,713,459 ordinary shares were issued to our unsecured financial creditors;
|
|
·
|
We issued NIS 448 million aggregate principal amount of Series H notes and NIS 218 million aggregate principal amount of Series I notes; and
|
|
·
|
Our corporate debts (i.e., the outstanding series A-G and 1 notes, the secured debts to Bank Hapoalim and the outstanding debt to Bank Leumi) were reduced from approximately NIS 2.8 billion (approximately $0.8 billion) to NIS 0.8 billon (approximately $ 0.2 billion).
|
(i)
|
Equity investments in our commercial and entertainment centers, our hotels and our residential projects, which are constructed by our wholly owned and jointly-controlled subsidiaries or joint ventures (special purpose entities that are formed for the construction of our real estate projects (a “Project Company”)). We generally finance approximately 30%-35% of such projects through equity investments in the Project Companies, while the remaining 65%-70% is generally financed through a credit facility secured by a mortgage on the project constructed by the respective Project Company, registered in favor of the financial institution that provides such financing. The equity investments in the Project Companies are typically provided by us (and our partners, if any) through shareholder loans that are subordinated to the credit facilities provided to the Project Company;
|
(ii)
|
Interest and principal payments on our notes and loans;
|
(iii)
|
Additional investment in Elbit Fashion, mainly for opening of new stores;
|
(iv)
|
Additional investment in our medical segment;
|
(v)
|
Equity investments in yielding assets in Western Europe;
|
(vi)
|
Other investments; and
|
(vii)
|
Payment of general and administrative expenses.
|
|
·
|
In December 2013 the consortium of shareholders of Uj Udvar, in which PC indirectly holds a 35% stake, completed the sale of the Uj Udvar project to a private investor for consideration of EUR 2.4 million (NIS 11 million).
|
|
·
|
On November 14, 2013, PC reached an agreement to sell Koregaon Park Plaza, a retail and entertainment located in Pune, India, subject to the satisfaction of certain closing conditions, including consent of the financing bank. The transaction values the asset in an amount of EUR 40.3 million (NIS 192.9 million), which is the asset’s current carrying amount. Following the repayment of the outstanding related bank loan, PC will receive an aggregate gross cash proceeds from the purchaser totaling approximately EUR 18.5 million (NIS 88.5 million) which will be paid in several installments. As of December 31, 2013, PC received an advance of approximately EUR 2.3 million (NIS 11.5 million) and is expected to collect the remaining consideration between 2014 and 2016. It should be noted, however, that PC's counter party in this transaction is currently subject to certain governmental investigation (not relating to us) and that there is uncertainty as to its ability to continue pursuing the transaction.
|
|
·
|
On October 31, 2013 the consortium of shareholders of Dream Island, in which PC holds a 43.5% stake, has completed the sale of the Dream Island project land to the Hungarian State for approximately EUR 17 million. The proceeds of the transaction were used by the consortium to repay a proportion of the secured bank loan.
|
|
·
|
In July 2013 PC completed the sale of 100% of its interest in a vehicle which holds the interest in the Prague 3 project (“Prague 3”), a logistics and commercial centre in the third district of Prague. The transaction values the asset at approximately EUR 11 million (NIS 53 million) and, as a result, further to related bank financing and other adjustments to the statement of financial position, PC has received cash proceeds of net EUR 7.6 million (NIS 36 million) .
|
|
·
|
In July 2013 PC completed the sale of 100% of its interest in an entity which holds the interest in plot of land in Prague. The transaction values the asset at approximately EUR 1.9 million (NIS 9 million).The net cash consideration after deducting a liability to third party amounted to EUR 1.3 million (NIS 6 million).
|
|
·
|
On May 29, 2013 PC completed the sale of its 50% interest in an Investee which mainly holds interests in an office complex project located in Pune, India. The total transaction value was EUR 33.4 million (NIS 158 million) and, PC has received gross cash proceeds of approximately EUR 16.7 million (NIS 79 million) in line with its holding.
|
|
·
|
In June 2012, a fire event occurred at the Koregaon Plaza shopping center in Pune, India, which resulted in a temporary close-down of the shopping center. PC's subsidiary maintains comprehensive general liability and property insurance, including business interruption insurance. During 2013 PC received an amount of NIS 32 million from the insurance company.
|
|
·
|
On December 6, 2012, InSightec completed its issuance of Series C preferred shares for an aggregate amount of $30.9 million, which included $27.6 million invested by GE and $3.9 million invested by other investors. According to the terms of the transaction, GE and we converted all the existing shareholders loans that had been granted to InSightec into InSightec's series B-1 preferred shares in accordance with the terms of those loans. The transaction reflected a post-money valuation of InSightec of approximately $105.9 million (or pre-money valuation of $75 million and following the conversion of the loans as described above). As part of such transaction, and a series of agreements between Insightec and GE (more fully discussed in this Item 5 “Operating and Financial Review and Prospects- “Overview”)”) GE and InSightec signed the Cooperation Agreement that regulates the commercial relationship between the parties, including, among other things, with respect to product exclusivity, cooperation with respect to the development and sale of the parties' complementary products, distribution, marketing and sales, intellectual property rights and licenses, sale terms and conditions, and similar items. Under the Cooperation Agreement, InSightec is prohibited from developing systems that would be compatible with MRI systems manufactured by companies other than GE for a defined time period.
|
|
·
|
In August 2012 we entered into a NIS 75 million note structured transaction with a certain financial institution pursuant to which we purchased a NIS denominated zero-coupon credit linked note due to mature on October 2, 2013 (the "CLN") from the other party. The CLN referenced a portfolio of our notes (having a market value of NIS 75 million). The note portfolio was purchased by us under our note repurchase program that was announced on May 23, 2011 and in
the framework of the transaction we sold the note portfolio to other party. In consideration, the other party paid us the market value of the note portfolio and arranged for the issuance of the CLN at an issue price of NIS 37.5 million.
|
|
·
|
On February 20, 2013, the other parties notified us of the early termination of the transactions as a result of the decline in the market price of our outstanding Notes and consequent failure to meet the loan-to-value covenants under the agreements governing the transactions. Under the terms of the transactions, upon the early termination of the transactions as a result of a decline in the market price of the notes the financial institutions are permitted to sell the notes held by each of them as of the date of termination, and use the proceeds of the sales to redeem the respective credit-linked notes, either execute a cash settlement or physical settlement thereof and deliver to us the proceeds of the sale of the notes or the remainder of the notes not sold, in excess of the early termination amounts, which shall be retained by the financial institutions. The early termination amounts consist of the principal and interest (at the agreed-upon internal rate of return) under the respective credit-linked notes and unwind costs which are due to the financial institutions under the transactions. The sale of notes held by the financial institutions covered the termination amounts. The amounts of cash or notes to be returned to us will depend on the prices at which the notes are sold by the financial institutions. As discussed above in Item 5 “Operating and Financial Review and Prospects", in June 2012 the EPN Group sold 47 of the shopping centers it held to BRE DDR Retail Holdings LLC for a purchase price of $1.43 billion. The total proceeds from the transaction, including cash and other net working capital items less property level financing which was repaid by the EPN Group or assumed by the buyer at closing (in the amount of approximately $928 million), amounted to approximately $530 million. The remaining two shopping centers were sold in July 2012 for $41.0 million.
|
|
·
|
On February 23, 2012, InSightec and InSightec’s wholly owned subsidiary concluded a series of agreements with GEHC pursuant to which GEHC will provide financing to InSightec in the form of convertible notes up to a total of $13,750,000, bearing interest at a rate of 6% per annum or a rate equivalent to the interest applicable to the financing provided by us and Elbit Medical. The convertible notes will be due and payable by October 1, 2016, and will be convertible into Series B-1 Preferred Shares of InSightec, In addition, we and Elbit Medical entered into a series of agreements with InSightec and GEHC pursuant to which, among other things, upon Elbit Medical obtaining the approval of its shareholders the financing granted to InSightec by us and Elbit Medical during 2010 and 2011 will be amended to provide similar loan terms and security mechanisms as set forth in this funding agreement, so that Elbit Medical and us will receive convertible notes convertible on the same terms and up to the same amounts as the GEHC notes. The convertible notes issued to GEHC and Elbit Medical and the note that will be issued to us will be secured, pari passu, by floating charges over the assets of InSightec and its wholly owned subsidiary. As for the conversion of such loans to Series B1 shares of InSightec – see Item 4. “Information on the Company” above.
|
|
·
|
In April 2012, we completed the sale of all our shares in Elbit Trade & Retail Ltd. and all the interests in G.B. Brands, Limited Partnership, which was the franchisee of the Gap
TM
and Banana Republic
TM
brands, to Gottex for a purchase price of approximately NIS 54.3 million (including the payment for the inventory purchased by Gottex and certain working capital items included in the closing initial balance sheet), which amount is subject to adjustment based upon Elbit Trade & Retail Ltd.'s financial statements as of the closing date.
|
|
·
|
In March 2012, we entered into a share purchase agreement with PPHE for the sale of our holdings in certain subsidiaries which own a 50% interest in the following hotels in the Netherlands: the Park Plaza Victoria Amsterdam Hotel, the Park Plaza Utrecht Hotel, the Arthotel Amsterdam and the Park Plaza Airport Hotel. These hotels were jointly owned by us and PPHE and were managed by PPHE. The transaction reflected an asset value of ˆ169 million (for all four hotels. The total net consideration payable to us was ˆ26.5 million. In addition, approximately ˆ58 million (approximately $75 million) of our subsidiaries’ share (50%) of banks loans was assumed by PPHE by virtue of the purchase of those subsidiaries and were eliminated from our consolidated balance sheet. The consideration was paid to us in May 2012 as follows: (i) ˆ23 million in cash; (ii) 700,000 ordinary shares of PPHE, with a market price of approximately ˆ2.0 million, based on the quotation of such shares’ price on the London Stock Exchange as of March 30, 2012; and (iii) an additional payment in the aggregate amount of up ˆ1.5 million that shall be made on the fourth anniversary of the date of transfer and shall be subject to certain adjustments, based on the PPHE shares’ market price, as set forth in the agreement.
|
|
·
|
On October 3, 2011, BUTU completed a refinancing of its five star Radisson Blu Hotel located in Bucharest, Romania. According to the facilities agreement, a leading international European bank granted BUTU a loan of up to ˆ71.5 million. The loan may be drawn down in two tranches, with Tranche A in the amount of approximately ˆ62.5 million having been drawn down on September 29, 2011, and Tranche B in the amount of approximately ˆ9.0 million to be drawn down between December 31, 2012 and March 31, 2013, subject to the satisfaction of certain conditions as stipulated in the facilities agreement. The proceeds of the loan was used, inter alia, to repay BUTU's current outstanding bank facility and to repay to us our shareholder loans in the amount of approximately ˆ25 million.
|
|
·
|
On September 23, 2011, PC paid an interim cash dividend payment of ˆ30 million to its shareholders, of which we received ˆ18.7 million, out of which ˆ8.7 million was used to serve our debt to an Israeli bank under a loan agreement dated March 2011 pursuant to which we pledged 29% of PC's outstanding shares.
|
|
·
|
On September 21, 2011, our wholly owned indirect subsidiary, Elbit USA, LLC ("EUS") entered into the Term Loan Agreement with Eastgate, for the Term Loan in the amount of $30 million. The loan was repaid in full in July 2012. For a discussion of the warrant granted in the framework of the loan agreement see "Closing of the Debt Restructuring and Issuance of New Shares and Notes" above.
|
|
·
|
On September 19, 2011, EDT distributed an interim dividend payment of $26 million. Elbit Plaza USA received a total distribution amount of $11.8 million. Each of ours and PC’s share in such distribution is approximately $5.9 million.
|
|
·
|
During July 2011, our indirectly held joint entity EPN Group finalized the binding takeover bid offer in EDT following which EPN Group's holdings in EDT increased to 97.5%. Thereafter, EPN Holdings completed the acquisition of the remaining units of EDT in accordance with the takeover offer. The total amount of the investments of the EPN Group in the framework of the binding takeover offer amounted to $242 million. The total amount of investment by us and PC in the framework of the binding takeover offer amounted to $57 million each.
|
|
·
|
In March 2011, we entered into a new financing agreement (subsequently amended) with an Israeli bank in the amount of $70 million, replacing the previous financing agreement. The new agreement is for a 6-year term and bears interest at a rate of LIBOR + 3.8% per annum. As security for this facility, we have pledged to the Israeli bank (i) an amount of 86 million shares of PC, representing approximately 29% of PC's outstanding shares, which will be subject to a 70% loan to value mechanism on PC's shares; (ii) all of our holdings (100%) in Elbit Trade & Retail Ltd. which, following the sale thereof to Gottex, was replaced with a pledge over all of our holdings in Elbit Fashion; and (iii) a deposit that equals next year’s principal and interest amount. In addition, we elected to exercise the option of pledging our holdings in some of our hotels in the Netherlands in order to credit the value of those holdings towards the satisfaction of the loan to collateral value ratio which, following the sale of those hotels to PPHE, was replaced with a pledge over certain receivables. The said agreement was replaced by a new facility agreement on December 29, 2013.
|
|
·
|
In March 2011, we issued additional unsecured non-convertible Series D Notes to investors in Israel, by expanding the existing series, in an aggregate principal amount of approximately NIS 96 million for gross proceeds of approximately NIS 108 million. For interest rates our notes, see “ - Other Loans” below.
|
|
·
|
In January 2011, PC issued additional Series A and B Notes for an aggregate consideration of approximately NIS 300 million.
|
Year ended December 31,
|
||||||||||||||||
2013
|
2013
|
2012
|
2011
|
|||||||||||||
Convenience
translation in $ thousands
|
NIS
Thousands
|
NIS
Thousands
|
NIS
Thousands
|
|||||||||||||
Net cash used in operating activities
|
(4,861 | ) | (16,873 | ) | (315,789 | ) | (240,889 | ) | ||||||||
Net cash provided by (used in) investing activities
|
102,136 | 354,517 | 1,455,511 | 325,352 | ||||||||||||
Net cash (used in) provided by financing activities
|
(156,921 | ) | (544,674 | ) | (1,152,882 | ) | (580,640 | ) | ||||||||
Decrease in cash and cash equivalents
|
(59,646 | ) | (207,030 | ) | (13,160 | ) | (496,177 | ) |
|
(i)
|
Cash flow from operating activities in 2013 included negative cash flow resulting from the cost of purchase of trading properties in an amount of NIS 11 million ($3 million) mostly regarding the development of the Koregaon park in India.
|
|
(ii)
|
Cash flow from operating activities in 2012 included negative cash flow resulting from the cost of purchase of trading properties and payments on the account of trading properties of NIS 80 million. Most of the acquisitions and investments in trading properties in 2012 were: India (Koregaon Park project) and Serbia (Krugajevac project).
|
|
(iii)
|
Cash flow from operating activities in 2011 included negative cash flow resulting from the cost of purchase of trading properties and payments on the account of trading properties of NIS 404 million. Most of the acquisitions and investments in trading properties in 2011 were: Poland (Torun project); India (Koregaon Park); Serbia (Krugajevac project); and Romania (the Casa Radio project).
|
|
(iv)
|
Cash flows from operating activities in 2013, 2012 and 2011 also included the proceeds from operations of our commercial centers, hotels, retail and U.S. retail properties, image guided segments (which are included as cash flow from discontinued operations) less operating expenses of those segments (including research and development expenses, sales and marketing and general and administrative expenses attributable directly to those segments) as well as general and administrative expenses of our headquarters.
|
|
(i)
|
Proceeds from sale of investment property in the Czech Republic in an amount of NIS 37.6 million ($11 million).
|
|
(ii)
|
Proceeds from realization of joint ventures entities (Kharadi in India, Dream island and Uj Udvar in Hungary) in an amount of NIS 96 million ($28 million).
|
|
(iii)
|
Proceeds from realization of long term deposits and loans in an amount of NIS 45 million ($13 million), mainly attributable to PC's operations.
|
|
(iv)
|
Proceeds from sale of available for sale marketable securities net of purchase of available for sale marketable securities amounted to NIS 51 million ($15 million).
|
|
(v)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 22 million ($6 million) mainly attributable to our hotel segment.
|
|
(vi)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 140 million (approximately $40 million).
|
|
(i)
|
Proceeds from sale of a Joint venture holding U.S. real estate properties (which are classified as discontinued operations) in an amount of NIS 874 million.
|
|
(ii)
|
Proceeds from realization of our Joint venture holding hotels in the Netherlands and from the sale of GAP in the total amount of NIS 147 million.
|
|
(iii)
|
Proceeds from realization of long term deposits and loans in an amount of NIS 276 million, mainly attributable to the sale of the long term structures by PC.
|
|
(iv)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 16 million.
|
|
(v)
|
Investments in associates and other companies in an amount of NIS 27, mainly attributable to investment of the Group in InSightec.
|
|
(vi)
|
Proceeds from interest received from deposits in the amount of NIS 38 million.
|
|
(vii)
|
Proceeds from sale of available for sale marketable securities net of purchase of available for sale marketable securities amounted to NIS 73 million.
|
|
(viii)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 89 million.
|
|
(i)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 34 million mainly attributable to the renovation of the Victoria hotel in Amsterdam and Radisson Blu Bucharest Hotel in Romania and leasehold improvements of Elbit Fashion’s new stores.
|
|
(ii)
|
Proceeds from long-term deposits and long-term loans in the amount of NIS 33 million mainly attributable to proceeds from long-term loans provided to PPHE’s subsidiary in respect of a loan provided to it in the framework of the sale of our hotels in London.
|
|
(iii)
|
Investments in long-term deposits and long term loans in the amount of NIS 46 million.
|
|
(iv)
|
Proceeds from interest received from deposits in the amount of NIS 65 million.
|
|
(v)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 333 million.
|
|
(vi)
|
Our cash flow from discontinued investing activities in 2011 amounted to NIS 61 million which is mainly attributable to (i) purchase of investment property in the U.S. in an amount of NIS 37 million; and (ii) investments in associates and other companies in the amount of NIS 20 million mainly attributable to the increase in our shareholding in the EPN Group in 2011 from 43.3%, to 45.38%.
|
|
(i)
|
Proceeds from re-issuance of our notes in an amount of NIS 76 million ($22 million).
|
|
(ii)
|
Interest paid in cash by us in the amount of NIS 98 million ($28 million) on our borrowings (mainly notes issued by PC and loans provided to our hotels and commercial centers).
|
|
(iii)
|
Repayment of borrowings, net, of proceeds from loans in the amount of NIS 420 million ($120 million), mainly attributable repayment of PC notes and repayments of loans provided to our operating commercial centers and our hotels.
|
|
(iv)
|
Proceeds from selling a derivative in the amount of NIS 8 million ($2 million).
|
|
(v)
|
Repayment of short-term credit in the amount of NIS 94 million ($27 million).
|
|
(i)
|
Proceeds from re-issuance of our notes to financial institutions in an amount of NIS 58 million.
|
|
(ii)
|
Repurchase of notes by us and PC in the amount of NIS 184 million.
|
|
(iii)
|
Interest paid in cash by us in the amount of NIS 347 million on our borrowings (mainly notes issued by us and PC and loans provided to our hotels and commercial centers).
|
|
(iv)
|
Repayment of borrowings, net of proceeds from loans in the amount of NIS 642 million, mainly attributable to the repayment of notes by us and by PC and and repayments of loans provided to our operating commercial centers and our hotels.
|
|
(v)
|
Proceeds from selling derivatives in the amount of NIS 62 million.
|
|
(vi)
|
Proceeds from short-term credit in the amount of NIS 202 million, mainly attributable to new loans raised by PC during 2012 in order to finance the construction of its trading property.
|
|
(vii)
|
Repayment of short-term credit in the amount of NIS 247 million.
|
|
(viii)
|
Net cash flow used in discounted financing activities amounted to NIS 55 million mainly attributable to repayment of loans attributable to our U.S. real estate properties.
|
|
(i)
|
Dividend paid to non-controlling interest by PC in the amount of NIS 57 million.
|
|
(ii)
|
Repurchase of notes by us and PC in the amount of NIS 202 million.
|
|
(iii)
|
Interest paid in cash by us in the amount of NIS 390 million on our borrowings (mainly notes issued by us and PC and loans provided to our hotels).
|
|
(iv)
|
Repayment of borrowings, net, of proceeds from loans in the amount of NIS 110 million), mainly attributable to the funds paid and funds raised by PC and us from unsecured non-convertible notes issued during 2011, and loans provided to us and to our hotels.
|
|
(v)
|
Proceeds from selling derivatives in the amount of NIS 223 million (approximately $58 million).
|
|
(vi)
|
Proceeds from short-term credit in the amount of NIS 411 million, mainly attributable to new loans raised by PC during 2011 in order to finance the construction of its trading property.
|
|
(vii)
|
Repayment of short-term credit in the amount of NIS 158.
|
|
(viii)
|
Net cash flow used in discontinued financing activities amounted to NIS 297 million mainly attributed to (i) payment in respect of transactions with non-controlling interests, net in the amount of NIS 382 million mainly from the purchase of the remaining 52.2% units of EDT by EPN Group; offset by (ii) loans received in the net amount of NIS 109 million which is attributable to our U.S. real estate properties.
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
NIS million
|
%
|
NIS million
|
%
|
NIS million
|
%
|
|||||||||||||||||||
Current assets
|
694 | 15 | % | 1,042 | 15 | % | 1,258 | 12 | % | |||||||||||||||
Current liabilities
|
4,794 | 105 | % | 1,722 | 26 | % | 2,227 | 21 | % | |||||||||||||||
Non-current assets
|
3,870 | 85 | % | 5,700 | 85 | % | 9,113 | 88 | % | |||||||||||||||
Non-current liabilities
|
179 | 4 | % | 3,632 | 54 | % | 6,605 | 64 | % | |||||||||||||||
Shareholders’ equity (Deficiency):
|
||||||||||||||||||||||||
Attributable to our equity holders
|
(1,033 | ) | (23 | )% | 289 | 4 | % | 360 | 3.5 | % | ||||||||||||||
Non-controlling interest
|
624 | 14 | % | 1,100 | 16 | % | 1,179 | 11.5 | % |
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series A Notes issued to the public
|
NIS 594.2 million (approximately $171 million)
|
NIS 201.4million (approximately $58 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
6% per annum, linked to the Israeli CPI.
|
10 semi-annual installments commencing August 2009 through 2014.
Interest payable by semi-annual installments commencing 2006 through 2014.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series B Notes issued to the public
|
$14.8 million
|
$ 4.1 million (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
Libor + 2.65%
|
10 semi-annual installments commencing August 2009 through 2014.
Interest payable by semi-annual installments commencing 2006 through 2014.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series C Notes issued to the public
|
NIS 455 million (approximately $122 million)
|
NIS 265.7 million (approximately $76.5 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5.3% per annum, linked to the Israeli CPI.
|
10 annual installments commencing September 2009 through 2018.
Interest payable by semi-annual installments commencing 2007 through 2018.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series D Notes issued to the public
|
NIS 746 million (approximately $200 million)
|
NIS 797.1 million (approximately $229.6 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5% per annum, linked to the Israeli CPI.
|
8 annual installments commencing April 2013 through 2020.
Interest payable by semi-annual installments commencing 2007 through 2020.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series E Notes issued to the public
|
NIS 64.5 million (approximately $17 million) (less amount of notes repurchased by us, as described below)
|
NIS 60.7 million (approximately $17.5 million)
|
6.3% per annum, linked to the Israeli CPI.
|
10 annual installments commencing July 2012 through 2021.
Interest payable by semi-annual installments commencing 2007 through 2021.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series F Notes issued to the public
|
NIS 502.8 million (approximately $135 million)
|
NIS 277.6 million (approximately $80 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5.7% per annum, linked to the Israeli CPI.
|
6 annual installments commencing October 2010 through 2015.
Interest payable by semi-annual installments commencing 2008 through 2015.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series G Notes issued to the public
|
NIS 466.5 million (approximately $125 million)
|
NIS 477.8 million (approximately $137.7 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5.08% per annum, linked to the Israeli CPI.
|
5 annual installments commencing December 2014 through 2018 (10% of the principal will be payable on December 31, 2014, 20% of the principal will be payable on December 31 on each of 2015 and 2016, and 25% of the principal will be payable on December 31 on each of 2017 and 2018).
Interest payable by semi-annual installments commencing 2010 through 2018.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Series 1 Convertible Notes issued to the public
|
NIS 112 million (approximately $30 million)
|
NIS 106.3 million (approximately $30.6 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
6.25% per annum.
|
First half to be paid on December 31, 2013, and second half to be paid on December 31, 2014.
Interest payable by semi-annual installments commencing 2009 through 2014.
|
Principal Security and Covenants
|
Unsecured.
|
||||
Other Information
|
The notes were convertible into our ordinary shares at the price of NIS 128 per share until July 31, 2013 and at the price of NIS 200 per share thereafter.
Upon consummation of the Debt Restructuring, such notes were cancelled.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Bank Hapoalim B.M.
|
$70.0 million
|
$48.7 million
|
LIBOR + 3.8%; if LTV (Loan to Value) greater than 0.7; Increase of interest by 2.5%
|
6 annual installments commencing March 2011 through 2017.
Interest payable by quarterly installments commencing March 2011 through 2017
.
|
Principal Security and Covenants
|
Pursuant to the applicable loan agreement, we are required to maintain compliance with certain financial covenants and other covenants relating to us and/or our subsidiaries, including:
·
Total shareholders' equity higher than NIS 1,500 million;
·
Loan To Value Ratio less than 0.75 (according to certain adjustments specified in the loan agreement);
·
Total financial assets (solo) greater than $50 million;
·
Ratio Net Debt / Cap less than 85%;
·
PC's total financial assets greater than $80 million;
·
Ratio Equity/Total Assets of PC greater than 25%; and
·
other customary obligations and undertakings.
As to the pledge of 29% of Plaza Center's outstanding shares (depositary interests) discussed above in "Item 5. Operating and Financial Review and Prospects", we are required to maintain a ratio between the net debt amount and the market value of the pledged shares (the "Collateral LTV Ratio"). If the Collateral LTV Ratio exceeds a certain rate, we may, at our sole discretion, do one or more of the following: (i) reduce the debt and (ii) provide a cash deposit pledged in favor of Bank Hapoalim. In the event that we fail to comply with any of the covenants, or upon the occurrence of an event of default (including the failure to provide additional securities), Bank Hapoalim shall be entitled to demand the immediate repayment of the loan and the interest rate will be increased. As of today we are in breach of that covenant and certain other covenants.
In the framework of the sale of our Dutch hotels to PPHE in March 2012, Bank Hapoalim has agreed to release the pledges over our (indirect) holdings in the Dutch hotels, which were replaced with an assignment by way of pledge over certain receivables due to us from PPHE's subsidiary. Please see "Item 4.B - Business Overview – Hotels".
|
||||
Other Information
|
On December 29, 2013 we entered into the Refinancing Agreement with Bank Hapoalim that cancelled and replaced the aforementioned loan agreement, pursuant to which, , the payment of the outstanding loan amount (approximately $48 million) was extended by a period of three years from the consummation of the Refinancing Agreement (i.e, February 20, 2017) and such amount will bear interest of LIBOR +3.8%, which will be payable quarterly, and an additional 1.3% which will be payable on the final maturity date. In addition, pursuant to the Refinancing Agreement (i) first-ranking fixed charges will be placed on our holdings and other rights in certain of our subsidiaries holding our hotels in Romania and Belgium as collateral securing our debt to Bank Hapoalim under the Refinancing Agreement. Such charges shall be placed in addition to the existing securities that Bank Hapoalim held under the loan previously received from Bank Hapoalim, i.e., a first ranking pledge over an amount of 86 million shares of PC, representing approximately 29% of PC's outstanding shares and on our holdings (100%) in Elbit Fashion Ltd. (ii) in the event that the Loan is paid before May 31, 2014 Bank Hapoalim shall return to us, without consideration, 8,423,368 Ordinary Shares and (iii) we are subject to certain prepayment obligations in the event of prepayment of the aforementioned new notes or distribution. For further details regarding the Refinancing Agreement, please see the Form 6-K we filed on November 14, 2013.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
EI
|
Bank Leumi Le-Israel B.M.
|
$24.2 million
|
$13.1 million
|
LIBOR + 3.5%
|
5 annual installments commencing June 2011 through March 2016.
Interest payable by quarterly installments commencing June 2011 through March 2016.
|
Principal Security and Covenants
|
Pursuant to the applicable loan agreement, we are obligated to maintain certain financial and other covenants, including:
·
Total shareholders' equity higher than NIS 1,500 million;
·
Loan To Value Ratio less than 0.75 (according to certain adjustments specified in the loan agreement);
·
Total financial assets (solo) greater than $50 million;
·
Ratio Net Debt / Cap less than 85%; and
·
other customary obligations and undertakings.
In the event that we fail to comply with any of the covenants, or upon the occurrence of an event of default, the bank shall be entitled to demand the immediate repayment of the loan. As of the date of this annual report we are in breach of some of the aforementioned covenants.
|
||||
Other Information
|
In March 2013 we informed Bank Leumi that we would not be making the upcoming payment to it on March 29, 2013 of principal and interest due under the loans made by Bank Leumi to us. For more information regarding the letter we received from Bank Leumi demanding repayment of the outstanding balance of approximately $14.1 million (approximately NIS 52 million) due as well as the inclusion of Bank Leumi in the Debt Restructuring, please see "Item 4.A – History and Development of the Company – Recent Events" and "Item 10.C – Material Contracts – The Debt Restructuring". A disagreement has arisen with respect to the effectiveness of certain pledges over our bank account in Bank Leumi, which in our opinion should have been erased and have no binding effect.
In connection with the Debt Restructuring we issued to an escrow agent for the benefit of Bank Leumi approximately NIS 8.0 million (approximately $2.3 million) in principal amount of our Series H Notes, approximately NIS 3.9 million (approximately $1.1 million) in principal amount of our Series I Notes, and 9,090,122 ordinary shares. We have outstanding disputes with Bank Leumi with respect to whether the debt we owe to Bank Leumi is unsecured or secured. Upon the resolution of such disputes, these securities will be transferred to Bank Leumi or to us (or one of our subsidiaries).
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
PC
|
Private note issuance to Polish institutional investors
|
PLN 60 million
|
PLN 60 million
|
6 Month Wibor+4.5%
|
Three years maturity, with balloon payment at the end of the maturity period.
Interest payable by semi-annual installments commencing May 2011 through November 2013.
|
Principal Security and
Covenants
|
Due to the initiation of suspension of payment proceedings by PC, there was no repayment of the Polish bonds principal and interest in November 2013 (See "PC debt restructuring").
Certain circumstances shall be deemed events of default giving the bondholders the right to demand early redemption, which include, inter alia, the following covenants:
·
Breach of the Cash Position as a result of the payment of dividends or the buy-back program falling below ˆ50 million. “Cash Position” means the sum of cash and cash equivalent of: cash, short and long interest bearing deposits with banks or other financial institutions, available for the sale of marketable securities, and restricted cash, calculated based on the consolidated financial statements.
·
Breach of financial ratios – the Net Capitalization Ratio exceeds 70%; "Net Capitalization Ratio" is the Net Debt divided by the Equity plus the Net Debt, as calculated by PC's auditor; “Net Debt” mean PC's total debt under: loans and borrowings, lease agreements, notes, other debt securities and other interest bearing or discounted financial instruments in issue, less related hedge derivatives, cash and cash equivalents, short and long-term interest bearing deposits with banks or other financial institutions, available for sale marketable securities and restricted cash, calculated based on the consolidated financial statements.
·
Failure to repay material debt – PC fails to repay any matured and undisputable debt in the amount of at least ˆ100 million within 30 days of its maturity.
|
||||
Borrower
|
Lender
|
Facility Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
SIA DIKSNA ("Riga Plaza“)
|
AS SEB Banka, Swedbank AS
|
ˆ29.7 million *
|
ˆ29.5 million *
|
3 months Euribor + 2.9%
|
Expires on 2017 October 31. Quarterly annuity payments calculated according to 20 years amortization, with balloon payment.
|
Principal Security and Covenants
|
Registered first ranking mortgage on Riga Plaza commercial center;
Assignment of all rights under relevant valid insurance policies;
Charges over each quota owned by PC in the borrower or share pledge agreement;
First ranking pledges on the borrowers’ accounts;
Prompt collection right to debit any of the bank accounts of the borrower;
Maintain a Debt Service Cover Ratio of 1.2;
Loan to Value ratio of 70%;
|
||||
Other Information
|
* Represents 50% of the loan, which is PC's shareholding in Riga Plaza.
* SIA Diksna is an equity accounted investee of PC.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
PC
|
GEFA Germany
|
US$ 4.56 million
|
ˆ2.5 million
|
USD Libor + 4% per annum
|
The loan matured on March 5, 2014, with a 75% balloon payment. Quarterly principal payments are $60,500.
|
Principal Security and Covenants
|
First priority aircraft mortgage registered with the Hungarian Aircraft Register at the CAA, Budapest.
Assignment of insurance proceeds.
|
||||
Other Information
|
The loan served to finance the purchase of a company airplane. In February 2014 we sold the airplane. The proceeds from the disposal were used to repay the bank facility taken for the purchase of the airplane, and we are currently negotiating with the financing bank the conditions to be set for the repayment of the remaining outstanding bank loan (approximately EUR 1 million).
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Koregaon Park
|
AXIS, SBH (India)
|
INR 2,040 million - credit facility
|
INR 1,874 million
|
Base rate+3.25%
|
Maturity of the loan is in the first quarter of 2021.
|
Principal Security and Covenants
|
Assignment of all rights under insurance proceeds.
|
||||
Other Information
|
Corporate guarantee of PC on part of loan, totaling EUR 14.2 million..
Pledge on assets of the project company.
|
Borrower
|
Lender
|
Facility amount
|
Amount Outstanding on Dec. 31, 2011
|
Interest
|
Payment Terms
|
Liberec Plaza
|
MKB BANK Zrt., ERSTE Bank AG
|
ˆ25 million
|
ˆ20.7 million
|
3 months Euribor+ 2.7% per annum
|
Repayment schedule:
June 2014- bullet payment of more than 90% of the principal.
|
Principal Security and Covenants
|
Registered first ranking mortgage and purchase option right on the real estate;
Assignment of all rights under relevant valid insurance policies;
Share pledge agreement;
First ranking pledges on the borrowers’ accounts;
Prompt collection right to debit any of the bank accounts of the borrower;
Maintain Debt Service Cover Ratio of 1.15;
Loan to Value ratio of 85%; and
Corporate guarantee of PC for Debt Service.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount *
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
A: Valley View
B: Acacia Park
C: Acacia Park
D: Fountain Park
E: Primavera Tower
|
A: OTP Bank Nyrt.
B: Bank Leumi Romania
C: Bank Leumi Romania
D: Bank Leumi
E: MKB Bank Zrt
|
A: ˆ8.2 million
B: ˆ1.4 million
C: ˆ1.3 million
D: ˆ1.42 million
E: ˆ1.5 million
|
A: ˆ8.2 million
B: ˆ0.762 million
C: ˆ1.0 million
D: ˆ1.42 million
E: ˆ1.5 million
|
A:Euribor + 6% p.a.
B: Euribor + 6% p.a.,
C: Euribor + 5% p.a.
D: Euribor + 6% p.a.
E: Euribor + 4.5% p.a.
|
A: Expired. Only interest payments. Negotiations ongoing.
B: Expired in July 2012. Negotiations ongoing
C: Expired in July 2012. Negotiations ongoing.
D: Expired in September 2012. Only interest payments.
E: Expired March 31, 2012. Only interest payments. Negotiations ongoing.
|
Principal Security and Covenants
|
First ranking mortgage on the properties.
Corporate guarantee of owners in case of Fountain Park and Acacia Park in respect of the interest only.
|
||||
Other Information
|
* All borrowings are presented as part of the equity accounted investees in PC’s report, and therefore are not shown separately. PC holds 50% of the abovementioned projects, with the exception of D, of which 25% is held by PC.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Suwalki Plaza
|
ING Bank Slaski S.A
|
ˆ33.5 million
|
ˆ31.6 million
|
3 months Euribor + 1.65% per annum
|
Expires December 29, 2020. Quarterly payments with fixed principal amounts and balloon payment at the end.
|
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurance, guaranties and agreements.
Maintain a debt service cover ratio of 1.2.
Loan to value ratio of 0.7.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Zgorzelec Plaza
|
Bank Zachodni WBK S.A.
|
ˆ22.3 million
|
ˆ22.0 million
|
3 months Euribor + 2.75% per annum for
|
Expires June 30, 2014.
|
Principal Security and Covenants
|
A first ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Maintain a debt service cover ratio of 1.15.
Loan to value ratio of 0.75.
|
||||
Other Information
|
PC is not in compliance with certain covenants included in the loan agreement and has a waiver in place until expiration of the loan.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Torun Plaza
|
Bank PEKAO S.A
|
ˆ50.1 million
|
ˆ47.9 million
|
3 months Euribor + 3% per annum
|
Expires December 31, 2017. Quarterly payments with fixed principal amounts and balloon payment at the end.
|
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Maintain a debt service cover ratio of 1.25.
Loan to value ratio of 0.7.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Kragujevac Plaza (Serbia)
|
OTP Bank Nyrt.
|
ˆ30.4 million
|
ˆ29.1
|
3 months Euribor + 5.0%
|
Maturity of the loan - 2027. Quarterly annuity payments (interest and principal).
|
Principal Security and Covenants
|
First and second ranking mortgage over the property.
Pledge on shares of borrower, on accounts, on receivables from the lease agreements.
Assignment of all rights from insurance.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Bucuresti Turism SA
|
Raiffeisen Bank International (“RBI”)
|
ˆ62.5 million
|
ˆ56 million
|
Euribor + 4.6%
|
The principal is repayable in 20 quarterly installments of ˆ0.65 million each, commencing September 2011, with a balloon payment of ˆ58.5 million to be repaid on June 30, 2016.
|
Principal Security and Covenants
|
First rank mortgage on the Radisson Blu Bucharest Hotel and the Centerville Hotel.
Future and existing cash flow through the bank accounts opened at Raiffeisen Bank.
Pledge over the shares of Bucuresti Turism SA and its subsidiary held by the majority share holder (BEA Hotels Eastern Europe BV).
Pledge of receivables arising from lease agreements and insurance policies concluded by the borrower.
Guarantee of the yearly debt service from us.
Title insurance over the mortgage asset.
|
||||
Other Information
|
On April 3, 2012, we concluded an agreement with RBI fixing the Euribor at 1.40% from January 1, 2013, until the end of the loan. On March 31, 2013 our option to apply for additional facility at the amount of ˆ 9 million had expired. Following the closing of the Debt Restructuring we have commenced discussions regarding possible extension of the said facility period.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Astrid Plaza Hotel NV
|
Bank Hapoalim
|
ˆ24.4 million
|
ˆ16.25 million
|
Euribor + 1.75%
|
Semi-annual principal repayment of ˆ625,000 to be paid commencing December 31, 2007 and ending on December 31, 2016.
ˆ12,500,000 to be paid at the end of the term.
Interest is payable on a semi-annual basis.
|
Principal Security and Covenants
|
First ranking pledge on Astrid Plaza shares.
First ranking mortgage over Astrid Plaza's real estate.
A mortgage mandate over Astrid Plaza's real estate which was converted into a mortgage.
First ranking pledge on a reserve fund of ˆ1 million, which is blocked on a deposit account.
Required to maintain a debt service cover ratio.
|
||||
Other Information
|
We guaranty Astrid Plaza's undertakings under the loan agreement. The guaranty is unlimited in amount.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Astrid Plaza Hotel NV, for the Park Inn Hotel
|
Fortis Bank
|
A: ˆ4 million
B: ˆ3.5 million
|
A: ˆ3.0 million
B: ˆ2.7 million
|
A: 2.436%
B: 2.963%
|
Repayment over a 15 year period.
|
Principal Security and Covenants
|
A first ranking mortgage on the Park Inn hotel and its assets.
A mortgage mandate over the Park Inn hotel and its assets which was converted into a mortgage.
Subordination of loan granted by us to the borrower and undertaking not to reduce such loan below a given amount.
Compliance with certain financial and operational covenants.
Undertaking to maintain an equity/asset ratio.
We have furnished the bank with a guarantee up to the amount of ˆ1.37 million.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2013
|
Interest
|
Payment Terms
|
Elbit Fashion
|
Bank Hapoalim
|
Up to NIS 8.5 million (approximately $2.4 million)
|
Prime + 2 %
|
Revolving short-term credit facility
|
|
Principal Security and Covenants
|
Fixed mortgage on all Elbit Fashion assets and a guarantee for the full amount provided to Elbit Fashion.
|
||||
Other Information
|
Following the Debt Restructuring and closing of the Refinancing Agreement with us, the Stand-By Letter of Credit that was provided by Bank Hapoalim to Elbit Fashion in the amount of approximately ˆ4 million in order to secure payment to third party suppliers was extended until December 31, 2014.
|
C.
|
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
|
D.
|
TREND INFORMATION
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
|
·
|
As part of the franchise and support agreements executed by our subsidiary, Elbit Trade & Retail Ltd. with third parties, which in turn were transferred to Elbit Fashion, and following such transfer Elbit Fashion has furnished Punto Fa with a stand-by letter of credit in the amount of approximately ˆ4.1 million (approximately $5.7 million) in order to secure payments under the agreements.
|
|
·
|
As part of transactions for the realization and/or sale of our holdings in certain subsidiaries or projects, or the realization and sale of certain business activities, we have undertaken to indemnify the respective purchasers for certain losses and costs incurred in connection with the sale transaction, and in particular, with respect to a breach of representations and warranties by seller. The indemnification provisions are usually capped at the purchase price and are limited in time, as set forth in each of the relevant sale agreements. Our management estimates that no significant costs will be borne in respect of these indemnification provisions.
|
|
·
|
As part of a lease agreement executed in July 2007 between us and the Israel Land Administration for a long-term lease of land in Tiberius, Israel, we had undertaken to finalize the construction in July 2010. During 2010 we received an extension for an additional three years until July 2013. As of the date of this Annual Report, we believe that further extension will be obtained. We have provided the Israel Land Administration with two bank guarantees in the aggregate amount of NIS 13 million linked to the increase in the Israeli consumer price index in order to secure our undertakings included in the lease agreement. As a security for the guarantees, we pledged deposits in the same amount. In accordance with the terms of the lease agreement, in the event either of the parties does not comply with the terms of the agreement, the agreement can be terminated by the other party.
|
|
·
|
As part of the transactions for the sale of our real estate assets, we have undertaken to indemnify the respective purchasers for any losses and costs incurred in connection with the sale transactions. The indemnification provisions usually include: (i) indemnifications in respect of integrity of title on the assets and/or the shares sold (
i.e.
: that the assets and/or the shares are wholly owned and are free and clear from any encumbrances and/or mortgage and the like). Such indemnification generally survives indefinitely and is capped at the purchase price in each respective transaction; and (ii) indemnifications in respect of other representations and warranties included in such sale agreements (
e.g.
: development of the project, responsibility for defects in the development project, tax matters and others). Such indemnifications are limited in time (generally three years from closing) and are generally capped at 25% to 50% of the purchase price. Our management estimates (based (
inter alia
) on a professional opinion and past experience) that no significant costs will be borne in respect of these indemnification provisions.
|
|
·
|
A former subsidiary of PC incorporated in Prague ("Bestes"), which was sold in June 2006 is a party to an agreement with a third party ("Lessee"), for the lease of commercial areas in a center constructed on property owned by it, for a period of 30 years, with an option to extend the lease period by an additional 30 years, in consideration for ˆ6.9 million (approximately $9.1 million), which has been fully paid. According to the lease agreement, the Lessee has the right to terminate the lease, subject to fulfillment of certain conditions set forth in the agreement. As part of the agreement for the sale of Bestes to Klepierre in June 2006, it was agreed that PC will remain liable to Klepierre in case the Lessee terminates its contract. PC’s management believes that this commitment will not result in any material amount due to be paid by it.
|
|
·
|
On November 21, 2010, Elbit Medical's shareholders approved the assignment of our indemnification obligations in favor of Gamida and its affiliated parties to Elbit Medical, without a right of reimbursement from us. Elbit Medical also undertook to indemnify Gamida and Teva Pharmaceutical Industries Ltd., as the shareholders of the joint venture Gamida Cell - Teva Joint Venture Ltd. for damages on certain matters. These indemnification undertakings of Elbit Medical replaced similar undertaking formerly made by us to these parties.
|
|
·
|
As required under the lease agreement for our new executive offices, in 2013 we provided bank guarantees to secure our compliance with the terms of the agreement in the total amount of approximately NIS 1.0 million.
|
|
·
|
We have guaranteed certain of PC's obligations to repay principal under its loan agreements with third parties up to an aggregate amount of NIS 368 million. For some such loans we have also guaranteed the payment of interest by PC. In addition, PC is a guarantor to obligations under loan agreements of its project companies with third parties up to an aggregate amount of NIS 177 million. PC also guaranteed the fulfillment of transactions entered into by three of its subsidiaries for a total aggregate amount of NIS 46 million.
|
|
·
|
We are a guarantor for Elbit Fashion's obligations under its lease agreements with respect to the Mango stores at all shopping malls (for a total of 28 stores) and with respect to its offices, and have undertaken to provide to secure its compliance with its agreements.
|
|
·
|
We have undertaken to provide guarantees for the benefit of the Israeli tax authority to secure Elbit Fashion's payment of customs duties and VAT, which are paid by way of direct debit authorization by Elbit Fashion, in the event that a debit authorization is rejected.
|
|
·
|
We have undertaken to provide bank guarantees and corporate guarantees for the benefit of the Israeli Customs Authority in the framework of a dispute between Elbit Trade and Retail Ltd. (which was sold to Gottex) and Elbit Fashion and the Customs Authority regarding customs duties charged with respect to the importation of the Mango and GAP brands to Israel. The Customs Authority had agreed that the collection of the disputed Customs charges will be put on hold until the resolution of the Company's motion, subject to the deposition of the aforementioned guarantees.
|
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
Payments due by Period
(in NIS thousands)
|
||||||||||||||||||||
Contractual Obligations as of December 31, 2013
|
Total
|
Less than 1
Year
|
2-3 Years
|
4-5 Years
|
After 5 Years
|
|||||||||||||||
Long-Term Debt
(1)
|
4,889,610 | 4,505,729 | 299,879 | 84,002 | - | |||||||||||||||
Operating Leases
(2)
|
305,439 | 30,513 | 58,863 | 53,287 | 162,776 | |||||||||||||||
Total
|
5,195,049 | 4,536,242 | 358,742 | 137,289 | 162,776 |
(1)
|
Long term debt includes interest that we will pay from January 1, 2014 through the loan maturity dates. Part of our loans bear variable interest rates and the interest presented in this table is based on the LIBOR rates known as of December 31, 2013. Actual payments of such interest (as presented in our financial statements) are significantly dependent upon the LIBOR rate prevailing as of the date of payment of such interest. For additional information in respect of the long term debt, see “Item 5.B. Liquidity and Capital Resources - Other Loans."
|
(2)
|
Our operating lease obligations are subject to periodic adjustment of the lease payments as stipulated in the agreements. In this table we included the lease obligation based on the most recent available information. For additional information in respect of our operating lease obligations see note 18A(2) to our annual consolidated financial statements.
|
ITEM 6
.
|
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
NAME
|
AGE
|
POSITION
|
Ron Hadassi
|
49
|
Chairman of the Board of Directors and Director
|
Alon Bachar
|
44
|
Director
|
Zvi Tropp
(1) (2)
|
74
|
External Director
|
Eliezer Avraham Brender
(1)
|
36
|
Director
|
Shlomi Kelsi
(1)
(2)
|
42
|
Director
|
Elina Frenkel Ronen
(1) (2)
|
40
|
External Director
|
Yoav Kfir
(1)
|
41
|
Director
|
Boaz Lifschitz
|
45
|
Director
|
Nadav Livni
|
40
|
Director
|
Ran Shtarkman
|
46
|
CEO of PC and former Co-Chief Executive Officer of the Company until 2012
|
Doron Moshe
|
43
|
Chief Financial Officer
|
Zvi Maayan
|
47
|
General Counsel
|
(1)
|
Member of the audit committee
|
(2)
|
Member of the compensation committee
|
B.
|
COMPENSATION OF DIRECTORS AND OFFICERS
|
C.
|
BOARD PRACTICES
|
D.
|
EMPLOYEES
|
E.
|
SHARE OWNERSHIP
|
ITEM
7.
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
A.
|
MAJOR SHAREHOLDERS
|
Name and Address
|
Number of Shares Beneficially Owned
|
Approximate Percentage of Shares
|
||||||
York Capital Management Global Advisers LLC and/or certain funds and/or accounts managed by it or its affiliates
(1)
|
108,957,004 | 19.7 | % | |||||
Davidson Kempner Capital Management LP and/or certain funds and/or accounts managed by it or its affiliates
(2)
|
78,871,727 | 14.3 | % | |||||
All officers and directors as a group
|
117,642 | (3) | 0.02 | % |
(1)
|
Based on a report on Schedule 13G filed with the SEC on March 10, 2014 by York Capital Management Global Advisers LLC.
|
(2)
|
Based on information received from the shareholders on March 12, 2014.
|
(3)
|
Includes options to purchase ordinary shares that were vested on March 10, 2014 or that were scheduled to vest within the following 60 days. .
|
B.
|
RELATED PARTY TRANSACTIONS
|
ITEM
8.
|
FINANCIAL INFORMATION
|
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
B.
|
SIGNIFICANT CHANGES
|
ITEM
9.
|
THE OFFER AND LISTING
|
NASDAQ
|
TASE
|
|||||||
Year Ended December 31,
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||
2013
|
3.50
|
0.69
|
3.41
|
0.73
|
||||
2012
|
3.32
|
1.80
|
3.23
|
1.74
|
||||
2011
|
13.97
|
1.98
|
12.74
|
1.93
|
||||
2010
|
24.76
|
12.05
|
25.08
|
12.37
|
||||
2009
|
28.09
|
9.30
|
28.75
|
10.03
|
||||
2008
|
56.09
|
7.58
|
56.55
|
7.51
|
NASDAQ
|
TASE
|
|||||||
Financial Quarter
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||
2014
|
||||||||
Q1
|
1.32
|
0.16
|
1.32
|
0.17
|
||||
Q2 (through April 28, 2014)
|
0.244
|
0.202
|
0.234
|
0.211
|
||||
2013
|
||||||||
Q1
|
3.50
|
1.43
|
3.41
|
1.53
|
||||
Q2
|
2.42
|
2.01
|
2.40
|
2.01
|
||||
Q3
|
2.12
|
1.02
|
2.04
|
1.02
|
||||
Q4
|
1.28
|
0.69
|
1.22
|
0.73
|
||||
2012
|
||||||||
Q1
|
3.32
|
2.25
|
3.23
|
2.43
|
||||
Q2
|
3.19
|
2.12
|
3.14
|
2.08
|
||||
Q3
|
2.89
|
2.04
|
2.90
|
2.02
|
||||
Q4
|
2.55
|
1.80
|
2.59
|
1.74
|
NASDAQ
|
TASE
|
|||||||
Month
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||
April 2014 (through April 28)
|
0.244
|
0.202
|
0.234
|
0.211
|
||||
March 2014
|
0.27
|
0.18
|
0.26
|
0.18
|
||||
February 2014
|
0.84
|
0.16
|
0.89
|
0.17
|
||||
January 2014
|
1.32
|
0.91
|
1.32
|
0.91
|
||||
December 2014
|
1.21
|
0.69
|
1.16
|
0.73
|
||||
November 2014
|
1.22
|
1.08
|
1.22
|
1.11
|
||||
October 2014
|
1.28
|
1.10
|
1.22
|
1.13
|
B.
|
PLAN OF DISTRIBUTION
|
C.
|
MARKETS
|
D.
|
SELLING SHAREHOLDERS
|
E.
|
DILUTION
|
F.
|
EXPENSES OF THE ISSUE
|
ITEM
10.
|
ADDITIONAL INFORMATION
|
A.
|
SHARE CAPITAL
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
|
·
|
the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;
|
|
·
|
some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and
|
|
·
|
the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.
|
|
·
|
refrain from any conflict of interest between the performance of his duties for the company and the performance of his other duties or his personal affairs
|
|
·
|
refrain from any activity that is competitive with the company;
|
|
·
|
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and
|
|
·
|
disclose to the company any information or documents relating to a company’s affairs which the director or officer has received due to his position as such.
|
|
(ii)
|
A breach of the duty of loyalty
vis-a-vis
us, provided that the director or officer acted in good faith and had reasonable basis to believe that the act would not harm us;
|
|
(iv)
|
Reasonable litigation expenses, including attorney fees, incurred by the director or officer as a result of an administrative enforcement proceeding instituted against him. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the director or officer in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 1968, as amended (the "Securities Law") and expenses that the director or officer incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees; or
|
|
(v)
|
Any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of our directors or officers.
|
|
(i)
|
Any financial liability he incurs or imposed on him in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court, provided that any undertaking to indemnify be restricted to events that, in the opinion of the board of directors, are anticipated in light of our actual activity at the time of granting the undertaking to indemnify and be limited to a sum or measurement determined by the board of directors to be reasonable under the circumstances;
|
|
(ii)
|
Reasonable litigation expenses, including legal fees, incurred by the director or officer or which he was ordered to pay by a court, within the framework of proceedings filed against him by or on behalf of us, or by a third party, or in a criminal proceeding in which he was acquitted, or in a criminal proceeding in which he was convicted of a felony which does not require a criminal intent; and
|
|
(iii)
|
Reasonable litigation expenses, including legal fees he incurs due to an investigation or proceeding conducted against him by an authority authorized to conduct such an investigation or proceeding, and which was ended without filing an indictment against him and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a financial obligation, as a substitute for a criminal proceeding relating to an offense which does not require criminal intent, within the meaning of the relevant terms in the Companies Law or in connection with an administrative enforcement proceeding or a financial sanction. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the director or officer in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law, and expenses that the director or officer incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees.
|
|
(i)
|
a breach of the duty of loyalty to the company, unless, with respect to insurance coverage or indemnification, the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm us;
|
|
(ii)
|
an intentional or reckless breach of the duty of care;
|
|
(iii)
|
an act done with the intention of unduly deriving a personal profit; or
|
|
(iv)
|
a fine imposed on the officer or director.
|
C.
|
MATERIAL CONTRACTS
|
D.
|
EXCHANGE CONTROLS
|
E.
|
TAXATION
|
|
·
|
an individual citizen or resident of the United States for U.S. federal income tax purposes;
|
|
·
|
a corporation (or another entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any political subdivision thereof or the District of Columbia;
|
|
·
|
an estate, the income of which may be included in the gross income for U.S. federal income tax purposes regardless of its source; or
|
|
·
|
a trust if, in general, (i) a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
G.
|
STATEMENT BY EXPERTS
|
H.
|
DOCUMENTS ON DISPLAY
|
I.
|
SUBSIDIARY INFORMATION
|
ITEM
11.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Functional currency
|
Linkage currency
|
Change in the exchange rate (%)
|
Profit (loss)
|
||||||||
(in NIS thousands)
|
|||||||||||
Financial assets
|
|||||||||||
Cash and deposits
|
NIS
|
U.S. dollar
|
+10 | % | 1,570 | ||||||
Cash and deposits
|
Euro
|
PLN
|
+10 | % | 1,622 | ||||||
Cash and deposits
|
Euro
|
NIS
|
+10 | % | 1,614 | ||||||
Cash and deposits
|
Euro
|
U.S. dollar
|
+10 | % | 1,574 | ||||||
Cash and deposits
|
U.S. dollar
|
NIS
|
+10 | % | 402 | ||||||
Total
|
6,782 | ||||||||||
Financial Liablities
|
|||||||||||
Loans at amortized cost
|
NIS
|
U.S. dollar
|
+10 | % | (21,694 | ) | |||||
Loans at amortized cost
|
Euro
|
PLN
|
+10 | % | (6,918 | ) | |||||
Debentures at amortized cost
|
NIS
|
U.S. dollar
|
+10 | % | (1,429 | ) | |||||
Debentures at amortized cost(i)
|
Euro
|
NIS
|
+10 | % | (26,859 | ) | |||||
Loans at amortized cost
|
Euro
|
U.S. dollar
|
+10 | % | (1,209 | ) | |||||
Loans at amortized cost
|
RON
|
Euro
|
+10 | % | (26,808 | ) | |||||
Total
|
(84,917 | ) |
|
(i)
|
In respect of PC’s Debentures which are presented at amortized cost. Regarding the foreign currency risk of PC's notes at FVTPL see "Interest Rate Risk" below.
|
The following table analyses the change in the fair value of the notes and the derivatives as of December 31, 2013. This analysis assumes that in each case all other parameters affecting the derivatives and the notes fair value remain constant:
|
Scope of
Price change
|
Profit (loss)
|
||||||
%
|
NIS thousands
|
|||||||
Exchange rate of the Euro against the NIS
|
+10 | % | 45,317 | |||||
Change in the Israeli CPI
|
+2.2 | % | (9,970 | ) | ||||
Change in the market interest rate
|
+1 | % | 5,432 |
Profit (loss)
|
||||
NIS thousands
|
||||
Loans, notes and convertible notes linked to the U.S. dollar
|
(4,681 | ) | ||
Loans and notes linked to the Euro
|
(21,259 | ) | ||
Loans linked to the INR
|
(2,076 | ) | ||
Debentures linked to the PLN (*)
|
(1,384 | ) | ||
(29,400 | ) |
(*)
|
PC raised a total of PLN 60 million (approximately NIS 71 million) from Polish institutional investors. The unsecured bearer notes governed by Polish law have a three year maturity and will bear interest at a rate of six months Polish WIBOR plus a margin of 4.5%. PC entered into a EUR-PLN cross-currency interest rate swap in order to hedge the expected payments in PLN (principal and interest) and to correlate them with the Euro. The derivative is measured at fair value and the notes are measured at amortized cost.
|
Functional Currency
|
Linkage Currency
|
Interest Rate %
|
Average Interest Rate %
|
Repayment Years
|
||||||||||||||||||||||||||||||||||||||
1 | 2 | 3 | 4 | 5 |
6 and thereafter
|
Total
|
||||||||||||||||||||||||||||||||||||
NIS million
|
||||||||||||||||||||||||||||||||||||||||||
ˆ | PLN |
6.98
|
6.98 | 69.2 | - | - | - | - | - | 69.2 | ||||||||||||||||||||||||||||||||
ˆ |
U.S. dollar
|
Libor+4
|
4.3 | 12.3 | - | - | - | - | - | 12.3 | ||||||||||||||||||||||||||||||||
ˆ | ˆ |
Euribor + 1.65-6
|
4 | 722.3 | - | - | - | - | - | 722.3 | ||||||||||||||||||||||||||||||||
ˆ | ˆ |
Euribor + 1.75
|
2.1 | 6 | 6 | 6 | 59.8 | - | - | 77.8 | ||||||||||||||||||||||||||||||||
ˆ |
NIS (linked to CPI)
|
4.5-5.4
|
4.5-5.4 | 887.5 | - | - | - | - | - | 887.5 | ||||||||||||||||||||||||||||||||
ˆ | ˆ | 2.436-2.963 | 2.436-2.963 | 2 | 2 | 2 | 2 | 19.9 | - | 27.9 | ||||||||||||||||||||||||||||||||
NIS
|
U.S. dollar
|
12
|
12 | 169.2 | - | - | - | - | - | 169.2 | ||||||||||||||||||||||||||||||||
NIS
|
U.S. dollar
|
10.2
|
10.2 | 47.5 | - | - | - | - | - | 47.5 | ||||||||||||||||||||||||||||||||
NIS
|
NIS (linked to CPI)
|
5-9
|
7.5 | 2,285.9 | - | - | - | - | - | 2,285.9 | ||||||||||||||||||||||||||||||||
RON
|
ˆ |
Euribor + 4.6
|
4.87 | 12.6 | 12.6 | 243 | - | - | - | 268.2 | ||||||||||||||||||||||||||||||||
NIS
|
NIS
|
6.25
|
6.25 | 108.4 | - | - | - | - | - | 108.4 | ||||||||||||||||||||||||||||||||
U.S. dollar
|
Libor+4.65
|
5.37 | 14.3 | 14.3 | ||||||||||||||||||||||||||||||||||||||
INR
|
INR
|
Base rate+3.25
|
13.25 | 103.8 | - | - | - | - | - | 103.8 | ||||||||||||||||||||||||||||||||
4,441 | 20.6 | 251 | 61.8 | 19.8 | - | 4,794.3 |
|
a)
|
Financial instruments included in current assets -
(cash and cash equivalents, deposits and marketable securities, trade receivables, other current assets and assets related to discontinued operations) - due to their nature, their fair values approximate to those presented in the balance sheet.
|
|
b)
|
Financial instruments included in non-current assets
- the fair value of loans and deposits which bear variable interest rate is an approximation to those presented in the balance sheet.
|
|
c)
|
Financial instruments included in current liabilities -
(short-term credit, suppliers, other current liabilities and liabilities related to discontinued operations) - due to their nature, their fair values approximate to those presented in the balance sheet. The fair value of derivatives (mainly swap transactions) is calculated by relying on valuations performed by third party experts, which take into account the expected future cash flow based on the terms and maturity of each contract using market interest rates for a similar instrument prevailing at the measurement date.
|
|
d)
|
Financial instruments included in long-term liabilities
- The fair value of the traded liabilities (notes) is determined according to closing prices as of December 31, 2013 quoted on the Tel Aviv and Warsaw Stock Exchanges, multiplied by the quantity of the marketable financial instrument issued as of that date. The fair value of non-traded liabilities at a fixed interest rate is determined according to the present value of future cash flows, discounted at a rate which reflects, in our estimation, the level of risk embedded in the financial instrument. The fair value of liabilities which carried variable interest rate is approximately the amounts presented in the balance sheet.
|
As of December 31, 2013
|
||||||||
Book Value
|
Fair Value
|
|||||||
Long- term loans at fixed interest rate
|
(27,682 | ) | (27,682 | ) | ||||
Debentures
|
(2,363,215 | ) | (721,431 | ) | ||||
(2,390,897 | ) | (749,113 | ) |
ITEM
12.
|
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
ITEM
13.
|
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
ITEM
14.
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
ITEM
15.
|
CONTROLS AND PROCEDURES
|
ITEM
16A.
|
AUDIT COMMITTEE FINANCIAL EXPERT
|
ITEM
16B.
|
CODE OF ETHICS
|
ITEM
16C.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Services Rendered
|
2012 Fees
|
2013 Fees
|
||||||
Audit (a)
|
$ | 736,618 | $ | 586,901 | ||||
Audit-related (b)
|
$ | 34,601 | $ | 49,970 | ||||
Tax (c)
|
$ | 295,438 | $ | 58,957 | ||||
All other fees (d)
|
- | - | ||||||
Total
|
$ | 1,066,657 | $ | 708,286 |
ITEM
16D.
|
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM
16E.
|
PURCHASES OF EQUITY SECURITIES BY THE COMPANY AND AFFILIATED PURCHASERS
|
ITEM
16F.
|
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
|
ITEM
16G.
|
CORPORATE GOVERNANCE
|
ITEM
16H.
|
MINE SAFETY DISCLOSURE
|
ITEM
17.
|
FINANCIAL STATEMENTS
|
ITEM
18.
|
FINANCIAL STATEMENTS
|
Page
|
|
Report of independent registered public accounting firm
|
2
|
Condensed Financial Statements:
|
|
Balance sheets
|
3-4
|
Statements of income
|
5
|
Statements of cash flows
|
6-7
|
Notes to the condensed financial statements
|
8-10
|
ITEM
19.
|
EXHIBITS
|
1.1
|
Amended and Restated Memorandum of Association (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form F-1 filed on March 13, 2014).
|
1.2
|
Amended and Restated Articles of Association (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form F-1 filed on March 13, 2014).
|
2.1
|
Form of ordinary share certificate
(incorporated by reference to Exhibit 3.3 of our Registration Statement on Form F-1 filed on March 13, 2014).
|
4.1
|
Summary of the letter of undertaking dated March 21, 2013 among the Company and the trustees of the Company’s Series 1, C, D, E, F and G note holders (incorporated by reference to Exhibit 99.1 of our Report on Form 6-K filed on March 21, 2013).
|
4.2
|
English translation of Agreement for the Provision of Consultancy Services for the Development of Real Estate Projects dated May 31, 2006, between Elbit Imaging Ltd. and Control Centers Ltd. (incorporated by reference to Exhibit 4.13 of our Annual Report on Form 20-F filed on July 2, 2007).
|
4.3
|
English translation of Deed of Trust dated January 31, 2008, between Plaza Centers N.V. and Reznik Paz Nevo, as amended on February 17, 2008 (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on June 30, 2008).
|
4.4
|
English translation of Employees, Directors and Offices Incentive Plan of 2006, as amended (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on June 26, 2009).
|
4.5
|
English translation of Management Services Agreement dated May 31, 2006, between Elbit Imaging Ltd. and Europe-Israel (M.M.S.) Ltd. (incorporated by reference to Exhibit 4.7 of our Report on Form 6-K filed on June 16, 2010).
|
4.6
|
Share Purchase Agreement dated December 29, 2010, among B.E.A. Hotels N.V., PPHE Hotel Group Limited and Park Plaza Hotels Europe Holdings B.V.
(incorporated by reference to Exhibit 4.8 of our Annual Report on Form 20-F filed on June 6, 2011).
|
4.7
|
Agreement of Purchase and Sale, dated as of January 10, 2012, among certain sellers and BRE DDR RETAIL HOLDINGS LLC (incorporated by reference to Exhibit 4.10 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.8
|
First Amendment to Agreement of Purchase and Sale, dated as of January 24, 2012, among certain sellers and BRE DDR RETAIL HOLDINGS LLC (incorporated by reference to Exhibit 4.11 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.9
|
Share Purchase Agreement, dated as of March 30, 2012, by and among B.E.A. Hotels N.V., PPHE Netherland N.V. and PPHE Hotel Group Limited (incorporated by reference to Exhibit 4.12 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.10
|
English translation of the Plan of Arrangement as approved by the Tel-Aviv Jaffa District Court on January 1, 2014.
|
8.1
|
List of subsidiaries.
|
12.1
|
Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
15.1
|
Annual Consolidated Financial Statements as of December 31, 2013 for the years ended December 31, 2013, 2012 and 2011 (incorporated by reference to Exhibit 99.1 of our Report on Form 6-K filed on March 31, 2014).
|
15.2
|
Annual Condensed Financial Statements as of December 31, 2013 for the years ended December 31, 2013, 2012 and 2011
|
Elbit Imaging Ltd.
|
|||
By:
|
/s/ Ron Hadassi | ||
Name:
|
Ron Hadassi
|
||
Title:
|
Chairman of the Board of Directors
|
Re:
|
Elbit Imaging Ltd. (the “Company”)
|
And Re:
|
Mordechay Zisser and/or a corporation controlled by him, including Europe Israel (M.M.S.) Ltd. (“Zisser”)
|
And Re:
|
Bondholders (Series A to G and 1) of the Company (the “Holders of Existing Bonds”)
|
And Re:
|
Mishmeret Trust Company Ltd. (the “Trustee for Series A-C Bonds”)
|
And Re:
|
Hermetic Trust (1975) Ltd. (the “Trustee for Series D Bonds”)
|
And Re:
|
Reznik Paz Nevo R.P.N. Trusts 2007 Ltd. (the “Trustee for Series E Bonds”)
|
And Re:
|
Reznik Paz Nevo Trusts Ltd. (the “Trustee for Series F Bonds”)
|
And Re:
|
Schiff Hazenfratz Trustees (2004) Ltd. (the “Trustee for Series G Bonds”)
|
And Re:
|
Strauss Lazar Trustees (1992) Ltd. (the “Trustee for Series 1 Bonds”)
|
And Re:
|
the Additional Creditors (as hereinafter defined)
|
1.
|
Definitions
|
“Series A Bonds
”
|
-
|
The Company’s Series A Bonds, amounting to a total of NIS 118,399,606 par value, listed on TASE (Security No. 1098789), and the Company’s Series A Bonds, amounting to a total of NIS 59,199,804 par value, which are not listed (Security No. 1127851);
|
“Series B Bonds
”
|
-
|
The Company’s Series B Bonds, amounting to a total of NIS 13,910,000 par value, listed on TASE (Security No. 1098805), and the Company’s Series B Bonds, amounting to a total of NIS 6,955,000 par value, which are not listed (Security No. 1127869);
|
“Series C Bonds
”
|
-
|
The Company’s Series C Bonds, amounting to a total of NIS 272,454,377 par value, listed on TASE (Security No. 1098797);
|
“Series D Bonds
”
|
-
|
The Company’s Series D Bonds, amounting to a total of NIS 746,124,843 par value, listed on TASE (Security No. 1106996);
|
“
Series E Bonds
”
|
-
|
The Company’s Series E Bonds, amounting to a total of NIS 58,108,500 par value, listed on TASE (Security No. 1107226);
|
“
Series F Bonds
”
|
-
|
The Company’s Series F Bonds, amounting to a total of NIS 250,912,550 par value, listed on TASE (Security No. 1107234);
|
“
Series G Bonds
”
|
-
|
The Company’s Series G Bonds, amounting to a total of NIS 466,472,000 par value, listed on TASE (Security No. 1118629);
|
“Series 1 Bonds
”
|
-
|
The Company’s Series 1 Bonds, amounting to a total of NIS 112,005,000 par value, listed on TASE (Security No. 1114768);
|
“
Elbit Ultrasound
”
|
-
|
Elbit Ultrasound (Luxembourg) B.V./ S.ar.l, whose address is 13-15
Avenue de la Liberté, L-1931, Luxembourg, Grand Duchy of Luxembourg, which is wholly-owned and fully-controlled by the Company, and through which the Company holds,
inter alia
, shares of (depository interests) Plaza Centers.
|
“
Existing Shareholders
”
|
-
|
Persons registered on the Record Date as shareholders of the Company in the Company’s shareholders registers and with the various TASE members in Israel, or their foreign counterparts.
|
“
Existing Bonds
”
|
-
|
The whole of Series A Bonds, Series B Bonds, Series C Bonds, Series D Bonds, Series E Bonds, Series F Bonds, Series G Bonds, Series 1 Bonds and the Separate Interest, including any new security created or to be created due to the split of any of the series by TASE as a result of a failure to pay the principal or interest thereunder;
|
“
TASE
”
|
-
|
Tel Aviv Stock Exchange Ltd.;
|
“
Arrangement
”
|
-
|
The arrangement between the Company, the Holders of Existing Bonds, the Additional Creditors and Zisser, in accordance with the provisions of this arrangement plan;
|
“
Secured Debt
”
|
-
|
The Company's existing debt to Bank Hapoalim on the Date of Consummation of the Arrangement, in respect of which Bank Hapoalim was given collateral prior to the release of the Arrangement Plan;
|
“
Record Date
”
|
-
|
The date occurring 7 Trading Days after the date on which all of the Conditions Precedent for consummation of the Arrangement contemplated in this Arrangement Plan are fulfilled and of which the Company shall notify in an immediate report 3 Trading Days in advance.
|
“
Issued Shares
”
|
-
|
The shares issued on the Date of Consummation of the Arrangement to the Unsecured Financial Creditors, as specified in Section 4.1 below;
|
“Trustee
s”
|
-
|
The Trustee for Series A-C Bonds; the Trustee for Series D Bonds; the Trustee for Series E Bonds; the Trustee for Series F Bonds; the Trustee for Series G Bonds; and the Trustee for Series 1 Bonds;
|
“
Additional Creditors
”
|
-
|
Bank Leumi Le-Israel B.M., which extended loans to the Company, the balance of principal of which loans, as of March 31, 2013, amounted to U.S. $13.25 million, and the amount of principal of which, after a setoff of approx. $446 thousand by Bank Leumi Le-Israel B.M. in April 2013, amounts to approx. U.S. $12.8 million;
|
“
Unsecured Financial Creditors
”
|
-
|
The Holders of Existing Bonds and the Additional Creditors;
|
“
Conditions Precedent
”
|
-
|
The conditions precedent for the consummation of the Arrangement and the actions specified in this Arrangement Plan, as specified in Section 7 below;
|
“
Persons Entitled to Separate Interest
”
|
-
|
Persons holding Series A Bonds, Series B Bonds, Series C Bonds and Series F Bonds, on the record date for payment of the Separate Interest;
|
“
Companies Law
”
|
-
|
The Companies Law, 5759-1999;
|
“
Trading Day
”
|
-
|
Any day on which trade takes place on TASE;
|
“
Business Day
”
|
-
|
Any day on which most of the banks in Israel are open for the transaction of business;
|
“
Date of Consummation of the Arrangement
”
|
-
|
A date which is a Business Day and a Trading Day and a trading day on the NASDAQ Stock Market, on which all of the transactions specified in this Arrangement Plan shall be performed and on which the Arrangement shall take effect, and which shall occur within 30 (thirty) days of the Record Date. The Company shall issue an immediate report regarding the Date of Consummation of the Arrangement at least 2 Trading Days in advance;
|
“
Series H Bonds
”
|
-
|
The Series H Bonds to be issued by the Company on the Date of Consummation of the Arrangement, as specified in Section 4 below;
|
“
Series I Bonds
”
|
-
|
The Series I Bonds to be issued by the Company on the Date of Consummation of the Arrangement, as specified in Section 4 below;
|
“
New Bonds
”
|
-
|
Series H Bonds and Series I Bonds, jointly;
|
“
Holders of New Bonds
”
|
-
|
Persons registered with the various TASE members as the holders of the balance of New Bonds on any relevant date;
|
“
Holders of Existing Bonds
”
|
-
|
Persons registered with the various TASE members as the holders of the balance of Existing Bonds on any relevant date;
|
“
Company Shares
”
|
-
|
Ordinary shares of the Company (of NIS 1 par value each, prior to the consummation of the Arrangement);
|
“
Trustees for the New Bonds
”
|
-
|
The trust companies which shall serve as trustees for the New Bonds under the New Trust Deeds, the identity of which shall be determined by the Date of Consummation of the Arrangement, or anyone serving, from time to time, as trustees for the New Bonds;
|
“
Plaza Centers
”
|
-
|
Plaza Centers N.V., a public company traded on the London Stock Exchange (LSE: PLAZ) and on the Warsaw Stock Exchange (WSE: PLAZ/PLAZACNTR), approx. 62.5% of which are held by the Company, of which approx. 62.25% are held through Elbit Ultrasound.
|
“
Separate Interest
”
|
-
|
The amount of interest not paid to the holders of Series A Bonds on February 20, 2013; the amount of interest not paid to the holders of Series B Bonds on February 20, 2013; the amount of interest not paid to the holders of Series C Bonds on March 1, 2013; the amount of interest not paid to the holders of Series F Bonds on April 1, 2013;
|
“
New Trust Deeds
”
|
-
|
The new trust deeds in respect of the New Bonds, which shall be signed vis-à-vis the Trustees for the New Bonds as part of this Arrangement Plan, and shall replace the Existing Trust Deeds, and which are attached hereto as
Annexes 1A and 1B
;
|
“
Existing Trust Deeds
”
|
-
|
The trust deed of February 21, 2006, between the Company and the Trustee for Series A Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series A Bonds; the trust deed of February 21, 2006, between the Company and the Trustee for Series B Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series B Bonds; the trust deed of August 23, 2006, between the Company and the Trustee for Series C Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series C Bonds; The trust deed of March 29, 2007, between the Company and the Trustee for Series D Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series D Bonds; the trust deed of September 10, 2007, between the Company and the Trustee for Series E Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series E Bonds; the trust deed of September 10, 2007, between the Company and the Trustee for Series F Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series F Bonds; the trust deed of July 21, 2009, between the Company and the Trustee for Series G Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series G Bonds; and the trust deed of July 21, 2009, between the Company and the Trustee for Series 1 Bonds, including all of the additions and amendments thereto, pursuant to which the trustee serves as the Trustee for Series 1 Bonds;
|
“
Elscint
”
|
-
|
Elscint Holdings and Investments NV, which is wholly-owned and fully-controlled by the Company and through which the Company indirectly holds, as of the date of the Arrangement Plan, all of its rights in hotels outside of Israel.
|
2.
|
Consummation of the Arrangement
- General
|
|
2.1.
|
The Existing Bonds, which have been held by the Company’s subsidiary corporation – Elbit Imaging Financing Services, Limited Partnership (the “
Subsidiary
”), in the amount of NIS 844,927 par value of Series A Bonds, NIS 602,806 par value of Series B Bonds, NIS 5,229,174 par value of Series D Bonds, NIS 5,334,066 par value of Series E Bonds, NIS 7,272,119 par value of Series F Bonds, NIS 11,794,426 par value of Series G Bonds, and NIS 3,642,561 par value of Series 1 Bonds, will be cancelled and delisted, without the Subsidiary being granted any consideration therefor, and the rights of the Subsidiary to any Separate Interest will also be cancelled and deleted, without the Subsidiary being granted any consideration therefor.
|
|
2.2.
|
Any security allotted to the Unsecured Financial Creditors will be allotted
pro-rata
among the holders of Series A Bonds, Series B Bonds, Series C Bonds, Series D Bonds, Series E Bonds, Series F Bonds, Series G Bonds, Series 1 Bonds, the Persons Entitled to Separate Interest and the Additional Creditors, according to the ratio between: (a) the total balance of the debt vis-à-vis any Unsecured Financial Creditor (and, with respect to the Holders of Existing Bonds - at pari value), including interest and linkage, as of the Record Date, and: (b) the total balance of the debt as aforesaid vis-à-vis all of the Unsecured Financial Creditors, including interest and linkage, as of the Record Date. The debt balance stated in Sections (a) and (b) above, as of September 17, 2013, is as specified in
Annex 2B
hereof. The aforesaid ratio will be calculated on the Record Date and the allotment of any security allotted under this Arrangement will be determined according to such ratio. It is hereby clarified that there will be no allotment of fractions of securities allotted under this Arrangement in accordance with the aforesaid ratio, and any share fraction will be rounded-up to the nearest whole number.
|
|
2.3.
|
The Arrangement will take effect, and be consummated, on the Date of Consummation of the Arrangement.
|
|
2.4.
|
All actions of the Arrangement, which, under the provisions of this Arrangement Plan, should be performed on the Date of Consummation of the Arrangement, shall be deemed to be performed simultaneously and as interlocking obligations which condition the force and effect of the Arrangement, and none of the actions of the Arrangement shall be deemed performed until all of the actions of the Arrangements are performed and completed. If the Date of Consummation of the Arrangement does not occur within 30 days of the Record Date (or on a later date to be agreed between the Company and the Trustees in writing, insofar as, per their reasonable discretion, a postponement of the Date of Consummation of the Arrangement as aforesaid is required for consummation of the Arrangement under its terms and conditions (provided that in any event of postponement as aforesaid, the Company shall issue an immediate report specifying the reasons for postponement of the Date of Consummation of the Arrangement)), or, if this Arrangement is lawfully terminated prior to the performance of all of the actions hereunder, any and all other actions performed in the framework of the Arrangement shall be retroactively revoked and the rights of all of the parties to the Arrangement shall revert to their previous condition, as if such actions had not been performed.
|
|
2.5.
|
In any event of contradiction between this Plan and the annexes hereto, the annexes shall prevail.
|
3.
|
Changes in the Company's Share Capital
|
|
3.1.
|
Increase of the Authorized Share Capital and Nullification of the Par Value
|
|
3.2.
|
The Warrant Granted by the Company to Eastgate Property, LLC
|
|
3.3.
|
The Issued Capital of the Company
|
4.
|
Replacement of the Existing Bonds and the Debts to the Additional Creditors with the Company Shares and the New Bonds
|
|
4.1.
|
Company Shares
|
|
4.2.
|
Issuance of the New Bonds
|
|
4.3.
|
Terms and Conditions of the New Bonds
|
|
4.3.1.
|
Series H Bonds
|
|
(a)
|
A first-ranking general charge (floating charge), unlimited in amount, over all of the rights and assets (of any type whatsoever) owned by the Company in the future from time to time and at any time (including rights and/or assets to which the Company will be entitled) (the “
Floating Charge for the Series H Trustee
”). The Floating Charge for the Series H Trustee shall include a prohibition to create any additional charges over the Company’s unpaid share capital and/or any rights and/or assets of the Company, subject to the provisions below;
|
|
(b)
|
A first-ranking fixed charge on all of the Company's shares in Elbit Ultrasound and on all of the Company’s present and future rights in Elbit Ultrasound (including the Company’s rights for repayment of loans by Elbit Ultrasound, rights to receive shares and dividend rights).
|
|
(c)
|
A first-ranking fixed charge on all of the Company's shares in Elscint and on all of the Company’s present and future rights in Elscint (including the Company’s rights for repayment of loans by Elscint, rights to receive shares and dividend rights).
|
|
(d)
|
Elbit Ultrasound shall guarantee to the Series H Trustee the fulfillment of the Company’s obligations to the Trustee and to the bondholders. Elbit Ultrasound shall further undertake vis-à-vis the Trustee not to grant pledges or collateral, of any type whatsoever, in favor of any third party, in respect of its holdings (present and future) of Plaza Centers shares, which are not pledged to Bank Hapoalim (and any right deriving therefrom, including the right to receive securities, the right to receive dividends or additional rights deriving from the holding of Plaza Centers shares). Elbit Ultrasound shall provide the Series H Trustee with a signed undertaking and guarantee, in a separate document, which shall include all of the provisions pertaining thereto in this Arrangement.
|
|
(e)
|
Elscint shall guarantee to the Series H Trustee the fulfillment of the Company’s obligations to the Trustee and to the bondholders. Elscint shall further undertake vis-à-vis the Trustee not to grant pledges or collateral, of any type whatsoever, in favor of any third party in respect of any and all of Elscint’s assets (present and future). Elscint shall provide the Series H Trustee with a signed undertaking and guarantee, in a separate document, which shall include all of the provisions pertaining thereto in this Arrangement.
|
|
(a)
|
As long as none of the Pledges are realized, and subject to the provisions below, the Pledges and the aforesaid undertakings of Elbit Ultrasound and Elscint, shall not restrict the sale and/or disposition of assets (including the pledged assets) by the Company and/or Elbit Ultrasound and/or Elscint nor the use of the proceeds therefrom for the purposes of the Company and/or for use by Elbit Ultrasound and/or Elscint, as applicable, nor shall they restrict the Company in receiving dividends or loan repayments from Elbit Ultrasound and/or Elscint, and using the monies for its purposes, nor shall they restrict the Company in selling its holdings, in whole or in part, in Elbit Ultrasound and/or in Elscint, and receiving the proceeds of such sale and using the proceeds for its purposes.
|
|
(b)
|
If cause shall have arisen for the realization of any of the Pledges, or a Material Event, as hereinafter defined, shall have occurred, then, as of such time, the following provisions shall apply (the “
Restricting Provisions
”): (1) any payment that the Company is entitled to receive from Elbit Ultrasound or from Elscint shall be transferred to an escrow account in the name of the Trustee for the bondholders and shall be used for the early redemption of the debt to the bondholders; (2) the Company may not sell assets thereof (including, but not limited to, Elbit Ultrasound shares or Elscint shares), the value of which exceeds NIS 50 million. Notwithstanding the aforesaid, if the cause for realization of any of the Pledges and/or the Material Event shall have ceased to exist (such that none of the events hereinafter defined as Material Events occurs) and for six consecutive months no Material Event occurs and no cause for realization of any of the Pledges arises, then, the Restricting Provisions shall cease to apply at the end of such six-month period. Furthermore, if a Material Event shall have occurred only under the third alternative in the definition of such term below (breach vis-à-vis a bank or a financing entity, as provided below), and such Material Event shall have ceased to exist (and there is also no cause for realization of the Pledges), then, even prior to the elapse of six consecutive months since the Material Event shall have ceased to exist, the Company may sell an asset thereof in an amount exceeding NIS 50 million, provided that the proceeds thereof are transferred to an escrow account in the name of the Trustee for the bondholders and are used for early redemption of the debt to the bondholders. “
Material Event
” shall mean one or more of the following three events: (1) the Company shall have committed a material breach (including failure to make a payment) of its undertakings to the Series H Trustee or to the holders of Series H Bonds; (2) a “going concern note” appears in the Company’s financial statements (published in respect of a period that is subsequent to the consummation of the Arrangement); (3) the Company is in breach of a payment undertaking or in breach of a financial covenant vis-à-vis a bank or vis-à-vis any other entity which shall have extended it credit or a loan.
|
|
(c)
|
Notwithstanding all of the provisions of this Arrangement Plan, as long as none of the Pledges are realized, the Floating Charge, all of the fixed charges noted above and the undertakings of Elbit Ultrasound and Elscint, shall not prevent the granting of additional pledges, including pledges that rank equal or senior to the Pledges as defined above in favor of Bank Hapoalim due to the Secured Debt, nor shall they prevent the granting of new pledges (including ones that rank equal or senior, as aforesaid, to the Pledges as defined above) for the purpose of receiving alternative financing for the Secured Debt (provided that the amount of financing to substitute the Secured Debt shall not exceed the amount of the Secured Debt on the date of substitution). For the purpose of the aforesaid, the Trustees shall be required to sign, and shall sign, any appropriate document in respect thereof (including an amendment or replacement of the documents of the Pledge in their favor), in order to allow for the registration of such pledegs in favor of Bank Hapoalim (or an alternative financing entity as aforesaid).
|
|
(d)
|
As long as none of the Pledges are realized, it is agreed that the Company, Elbit Ultrasound and Elscint may carry out each one of the actions and transactions specified in Section 9.3.16 of the trust deed, without the Pledges and the undertakings of Elbit Ultrasound and Elscint, as specified above, constituting an impediment thereto.
|
|
(a)
|
Subject to the provisions of the trust deed, in the event that the Company issues additional bonds, which are secured by any type of collateral, the net proceeds to be received from such issuance shall be used for prepayment of the Series H Bonds.
|
|
(b)
|
The Company may not increase the Series H Bonds without approval thereof by a meeting of holders of Series H Bonds, in a resolution adopted by a special majority. Breach of this undertaking shall constitute cause for acceleration of payment under the Series H Bonds.
|
|
(c)
|
The Company may prepay the Series H Bonds, at any time, at pari price (full liability value), with no fee and/or compensation and/or other payment due to prepayment. Such prepayment shall be carried out in accordance with and subject to the TASE Directives and the provisions of the New Trust Deeds with respect to early redemption.
|
|
(d)
|
For as long as the Series H Bonds are not fully paid, then, in the event that the Company performs a "distribution", as per the definition thereof in the Companies Law, including payment of dividend in any manner to its shareholders, the Company will be obligated, simultaneously with the performance of the distribution or payment of dividend, to prepay the Series H Bonds, in an amount equal to the amount of dividend paid by the Company (or in an amount equal to the value of the distribution). For the avoidance of doubt, if, on the date of the distribution, the amount of outstanding balance of the bonds is lower than the amount of dividend to be paid, the Company shall pay the full amount of the outstanding balance on the date of the distribution.
|
|
4.3.2.
|
Series I Bonds
|
|
(a)
|
A second-ranking general charge (floating charge), unlimited in amount, on all of the rights and assets (of any type whatsoever) owned by the Company in the future from time to time and at any time (including rights and/or assets to which the Company will be entitled) (the “
Floating Charge for the Series I Trustee
”). The Floating Charge for the Series I Trustee will include a prohibition on any additional pledges on the Company’s unpaid share capital and/or any rights and/or assets of the Company, subject to the provisions below.
|
|
(b)
|
A second-ranking fixed charge on all of the Company's shares in Elbit Ultrasound and on all of the Company’s present and future rights in Elbit Ultrasound (including the Company’s rights for repayment of loans by Elbit Ultrasound, rights to receive shares and dividend rights).
|
|
(c)
|
A second-ranking fixed charge on all of the Company's shares in Elscint shares and on all of the Company’s present and future rights in Elscint (including the Company’s rights for repayment of loans by Elscint, rights to receive shares and dividend rights).
|
|
(d)
|
Elbit Ultrasound shall guarantee to the Series I Trustee the fulfillment of the Company’s obligations to the Trustee and to the bondholders. Elbit Ultrasound shall further undertake vis-à-vis the Trustee not to grant pledges or collateral, of any type whatsoever, in favor of any third party, in respect of its holdings (present and future) of Plaza Centers shares, which are not pledged to Bank Hapoalim (and any right deriving therefrom, including the right to receive securities, the right to receive dividends or additional rights deriving from the holding of Plaza Centers shares. Elbit Ultrasound shall provide the Series I Trustee with a signed undertaking and guarantee, in a separate document, which shall include all of the provisions pertaining thereto in this Arrangement.
|
|
(e)
|
Elscint shall guarantee to the Series I Trustee the fulfillment of the Company’s obligations to the Trustee and to the bondholders. Elscint shall further undertake vis-à-vis the Trustee not to grant pledges or collateral, of any type whatsoever, in favor of any third party in respect of any and all of Elscint’s assets (present and future). Elscint shall provide the Series I Trustee with a signed undertaking and guarantee, in a separate document, which shall include all of the provisions pertaining thereto in this Arrangement.
|
|
(a)
|
As long as none of the Pledges are realized, and subject to the provisions below, the Pledges and the aforesaid undertakings of Elbit Ultrasound and Elscint, shall not restrict the sale and/or disposition of assets (including the pledged assets) by the Company and/or Elbit Ultrasound and/or Elscint nor the use of the proceeds therefrom for the Company’s purposes and/or for use by Elbit Ultrasound and/or Elscint, as applicable, nor shall they restrict the Company in receiving dividends or loan repayments from Elbit Ultrasound and/or Elscint and using the monies for its purposes, nor shall they restrict the Company in selling its holdings, in whole or in part, in Elbit Ultrasound and/or in Elscint, and receiving the proceeds of such sale and using the proceeds for its purposes.
|
|
(b)
|
If cause shall have arisen for the realization of any of the Pledges, or a Material Event, as hereinafter defined, shall have occurred, then, as of such time, the following provisions shall apply (the “
Restricting Provisions
”): (1) any payment that the Company is entitled to receive from Elbit Ultrasound or from Elscint shall be transferred to an escrow account in the name of the Trustee for the bondholders and shall be used for the early redemption of the debt to the bondholders; (2) the Company may not sell assets thereof (including, but not limited to, Elbit Ultrasound shares or Elscint shares), the value of which exceeds NIS 50 million. Notwithstanding the aforesaid, if the cause for realization of any of the Pledges and/or the Material Event shall have ceased to exist (such that none of the events hereinafter defined as Material Events occurs) and for six consecutive months no Material Event occurs and no cause for realization of any of the Pledges arises, then, the Restricting Provisions shall cease to apply at the end of such six-month period. Furthermore, if a Material Event shall have occurred only under the third alternative in the definition of such term below (breach vis-à-vis a bank or a financing entity, as provided below), and such Material Event shall have ceased to exist (and there is also no cause for realization of the Pledges), then, even prior to the elapse of six consecutive months since the Material Event shall have ceased to exist, the Company may sell an asset thereof in an amount exceeding NIS 50 million, provided that the proceeds thereof are transferred to an escrow account in the name of the Trustee for the bondholders and are used for early redemption of the debt to the bondholders. “
Material Event
” shall mean one or more of the following three events: (1) the Company shall have committed a material breach (including failure to make payment) of its undertakings to the Series I trustee or to the Series I bondholders; (2) a “going concern note” appears in the Company’s financial statements (published in respect of a period that is subsequent to the consummation of the Arrangement); (3) the Company is in breach of a payment undertaking or in breach of a financial covenant vis-à-vis a bank or vis-à-vis any other entity which shall have extended it credit or a loan.
|
|
(c)
|
Notwithstanding all of the provisions of this Arrangement Plan, as long as none of the Pledges are realized, the Floating Charge, all of the fixed charges noted above and the undertakings of Elbit Ultrasound and Elscint, shall not prevent the granting of additional security interests, including security interests that rank equal or senior to the Pledges as defined above in favor of Bank Hapoalim due to the Secured Debt, nor shall they prevent the granting of new security interests (including ones that rank equal or senior, as aforesaid, to the Pledges as defined above) for the purpose of receiving alternative financing for the Secured Debt (provided that the amount of financing to substitute the Secured Debt does not exceed the amount of the Secured Debt on the date of substitution). For the purpose of the aforesaid, the Trustees shall be required to sign, and shall sign, an appropriate document in respect thereof (including an amendment or replacement of the documents of the Pledges in their favor) in order to allow for the registration of such security interests in favor of Bank Hapoalim (or an alternative financing entity as aforesaid).
|
|
(d)
|
As long as none of the Pledges are realized, it is agreed that the Company, Elbit Ultrasound and Elscint may carry out each one of the actions and transactions specified in Section 9.3.16 of the trust deed, without the Pledges and the undertakings of Elbit Ultrasound and Elscint, as specified above, constituting an impediment thereto.
|
|
(e)
|
For the avoidance of doubt, it is clarified that, subject to the provisions of Subsection (c) above, upon repayment of the Series H Bonds, all of the aforesaid pledges in favor of the Series I Trustee shall become first-ranking pledges. It is further clarified that the rights of the Series I Trustee by virtue of the pledges registered in its favor shall be subordinate to the rights of the Series H Trustee by virtue of the pledges registered in its favor and shall be subject to the provisions of the trust deeds and the letter of subordination attached thereto, which shall be signed by the Series I Trustee.
|
|
(a)
|
Subsequently to the full repayment of the Series H Bonds, in the event that the Company issues additional bonds, which are secured by any type of collateral, the net proceeds to be received from such issuance shall be used for prepayment of the Series I Bonds.
|
|
(b)
|
The Company may not increase the Series I Bonds without approval thereof by a meeting of holders of Series I Bonds, in a resolution adopted by a special majority. Breach of this undertaking shall constitute cause for acceleration of payment under the Series I Bonds.
|
|
(c)
|
The Company may prepay the Series I Bonds, at any time, at pari price (full liability value), with no fee and/or compensation and/or other payment due to prepayment. Such prepayment shall be carried out in accordance with and subject to the TASE Directives and the provisions of the New Trust Deeds with respect to early redemption.
|
|
(d)
|
If the Series H Bonds shall have been fully repaid, and as long as 4.5 years shall not have elapsed from the Commencement Date, in the event that the Company performs a "distribution", as per the definition thereof in the Companies Law, including payment of dividend in any manner to its shareholders, the Company will be obligated to perform, simultaneously with the performance of the distribution or payment of dividend, a prepayment of the Series I Bonds, in an amount equal to the amount of dividend paid by the Company (or in an amount equal to the value of the distribution), after deduction of any amount that shall have been paid, if any, to the holders of Series H Bonds due to the same distribution for full repayment thereof. For the avoidance of doubt, if, on the date of the distribution, the amount of outstanding balance of the bonds is lower than the amount of dividend to be paid, the Company shall pay the full amount of the outstanding balance on the date of the distribution.
|
|
4.4.
|
Listing of the New Bonds
|
|
4.5.
|
The Company’s board of directors, in coordination with the Trustees, may determine technical supplementary provisions for the consummation of the Arrangement and for replacement of the Existing Bonds and the debts to the Additional Creditors as aforesaid, if and insofar as such provisions are required, provided that nothing in such changes shall cause any prejudice, other than negligible, on the rights of the Unsecured Financial Creditors.
|
5.
|
Amendment of the Articles of Association of the Company, the Board of Directors of the Company
|
|
5.1.
|
On the Date of Consummation of the Arrangement, the Company’s articles of association will be amended and replaced with the articles of association attached hereto as
Annex 4A
, which shall include,
inter alia
, the following provisions:
|
|
5.1.1.
|
Appointment of directors – provisions concerning the appointment of directors of the Company, principally providing that the directors of the Company be appointed by the general meeting of shareholders, by a simple majority of the shareholders of the Company.
|
|
5.1.2.
|
The number of directors serving on the Company’s board of directors shall not exceed 7 directors plus 2 external directors (or a different number of external directors as required under law).
|
|
5.1.3.
|
Authorized capital – increase of the Company’s authorized capital to 700,000,000 shares of no par value, as specified in Section 3.1 above.
|
|
5.1.4.
|
A special tender offer mechanism in respect of purchase of shares in the Company; provisions in respect of the mechanism and majority required for the purpose of expansion of the Company’s business into new fields.
|
|
5.2.
|
On the Date of Consummation of the Arrangement, the Company’s memorandum shall be technically amended, in the language attached hereto as
Annex 4B
, in order to reflect the changes in the Company’s capital as specified in Section 3.1 above.
|
|
5.3.
|
As early as possible after the Date of Consummation of the Arrangement, the Company shall hold a general meeting of the shareholders thereof, the agenda of which shall consist of the termination of service of all of the directors serving on the Company’s board of directors (with the exception of the external directors) and appointment of members of the board of directors, as shall be specified in the notice to be issued to the shareholders prior to such general meeting.
|
|
5.4.
|
The Company shall act for such meeting to convene in accordance with the provisions of Section 72 of the Companies Law no later than 30 days after the Date of Consummation of the Arrangement (the date of election of the directors by the general meeting shall hereinafter be referred to as: the “
Date of Election of the New Board of Directors
”).
|
|
5.5.
|
The directors to be appointed by the shareholders meeting shall be directors who meet the requirement of independence of the NASDAQ Stock Market, to the extent required under law and/or the NASDAQ Stock Market Rules.
|
6.
|
Realization of the Company’s Holdings in Elbit Medical Technologies Ltd. (“Elbit Medical”)
|
7.
|
Conditions Precedent
|
|
7.1.
|
Obtaining approval from the meeting of Unsecured Financial Creditors for the consummation of this Arrangement, in accordance with the provisions of Section 350 of the Companies Law;
|
|
7.2.
|
Obtaining approval from the Company’s competent organs under Chapter 5 of Part 6 of the Companies Law, to the extent required under law;
|
|
7.3.
|
Obtaining approval of the court to the Arrangement, in accordance with the provisions of Section 350 of the Companies Law, which approves the Arrangement and determines,
inter alia
, that: (1) the issuance of securities by the Company as stated in Section 4 above shall be carried out with an exemption from a prospectus under the Securities Law, 5728-1968 (the “
Securities Law
”) and the restrictions prescribed by the Securities Law with respect to resale shall not apply to the securities allotted in the framework of the Arrangement; (2) for the purpose of application of the exemption set out in Section 3(a)(10) of the U.S. Securities Act 1933, the honorable court has lawful jurisdiction to: (a) hold a hearing regarding the terms and conditions of the Arrangement, in which hearing all of the creditors, to whom the Company is intended to issue the securities under the Arrangement, may attend (even if there is no duty under law to hold such a hearing); and (b) determine that the terms and conditions of the Arrangement are procedurally and substantively fair to the creditors participating in the Arrangement, or, alternatively, that the terms and conditions of the Arrangement are beneficial to the creditors; and that the court held such a hearing and determined that the terms and conditions of the Arrangement are procedurally and substantively fair, as aforesaid, or, alternatively, that they are beneficial to the creditors, and (3) the Company’s authorized capital will be increased, the dormant shares will be cancelled and the par value of its shares will be nullified, as specified in Section 3.1 above;
|
|
7.4.
|
Obtaining approval from TASE for the listing of the New Bonds and the listing of the Issued Shares, giving notice to the NASDAQ Stock Market with respect to the allotment of the Issued Shares (insofar as required under law) and approval from both TASE and NASDAQ for additional actions required under this Arrangement Plan, insofar as required;
|
|
7.5.
|
Obtaining any other approval or consent required under any law, order of a competent authority or material agreement that the Company is a party to, all if and insofar as required for the closing of the Arrangement.
|
|
7.6.
|
The consent of Bank Hapoalim is obtained, or a court order is rendered ordering that as long as the Company complies with the payments of principal and interest to the bank, under the Existing Credit Terms Vis-à-Vis the Bank (and payment of any arrears, if any, in the period until the Date of Consummation of the Arrangement, within 7 days of the Date of Consummation of the Arrangement), the bank shall not be entitled to accelerate the payment of the Company’s debt thereto (for this purpose, hereinafter in this section, the “
Company
” shall mean the Company or any private corporation or private entity controlled by the Company). For the avoidance of doubt, for this purpose, the “
Existing Credit Terms Vis-à-Vis the Bank
” shall mean payment according to the existing payment schedule between the Company and the bank, irrespective of the acceleration of payment of the debt thereto.
|
|
7.7.
|
The Trustees for the New Bonds shall be provided with all of the documents that need to be provided to the Trustees for the bonds under the New Trust Deeds, by the Date of Consummation of the Arrangement.
|
8.
|
Undertakings of the Company
|
9.
|
Approval by the Tax Authorities
|
10.
|
On May 8, 2013 – the date on which a motion for convening meetings pursuant to Section 350 of the Companies Law was filed with the court by the Company – all of the provisions of the Non-Binding Summary Terms of a Proposed Restructuring of Elbit Imaging Ltd., between the Company and the funds York Capital and Davidson Kempner, automatically expired, insofar as such provisions, or any part thereof, had a binding effect.
|
11.
|
Approval of this Plan constitutes approval of all of the annexes hereto, even if their provisions have not been expressly reflected in this Arrangement Plan.
|
12.
|
As of the Date of Consummation of the Arrangement, the Arrangement will not be revocable by any of the parties for any reason whatsoever, without derogating from other remedies available to the any of the parties, subject to the provisions of Section 14 below.
|
13.
|
As of the Date of Consummation of the Arrangement, any change of any of the terms and conditions of the Arrangement, which shall be set forth in the New Trust Deeds, shall be made in the manner provided therefor by the New Trust Deeds, without need for an additional application to court.
|
14.
|
As of the Date of Consummation of the Arrangement –
|
|
14.1.
|
Each one of the Discharged Parties (as hereinafter defined) shall be fully, conclusively, absolutely and irrevocably exempted and discharged from any claim, demand or other suit, known or unknown, for any cause created in the period until the Date of Consummation of the Arrangement, including on any matter directly or indirectly related to the bonds and/or the trust deeds of the bonds and/or pertaining to the conduct of the Company and the officers thereof and/or companies held by the Company and officers thereof and/or the actions of any such company and officer, all with the exception of willful or fraudulent criminal omissions or acts (the “
Waiver
”). Notwithstanding the aforesaid, in any case where one of the Discharged Parties is sued (the “
Defendant
”) by any entity (the “
Plaintiff
”) for any cause, including the causes included in the Waiver, the Waiver will not prevent the Defendant from filing a counterclaim against the Plaintiff and/or filing third party notices against any entity, including against the Discharged Parties or any of them (the “
Third Party
”), without any prejudice, in any manner, to the rights of the Third party under the Waiver vis-à-vis the Plaintiff. Notwithstanding the aforesaid, the Company will be prevented from filing a third party notice against any of the Discharged Parties.
|
|
14.2.
|
For purposes of this Section 14, the “
Discharged Parties
” are defined as the holders of bonds of the Company and/or representative bodies of bondholders of the Company and/or the Trustees and/or the Additional Creditors and/or their attorneys and/or the shareholders of the Company and/or anyone on their behalf and/or the Company and/or officers of the Company and/or employees of the Company and/or any company controlled or held by the Company (the “
Subsidiaries
”) and/or the officers and employees of the Company’s Subsidiaries and/or the Company’s attorneys and/or the Company’s consultants and/or anyone on their behalf, with the exception of Mr. Zisser, who himself and/or any corporation controlled by him (including by virtue of Mr. Zisser serving as CEO and as director) are excluded from the Discharged Parties. For the avoidance of further doubt, any bondholder will also individually and independently benefit from the Waiver and the Waiver shall also be effective from any bondholder to the rest of the bondholders.
|
|
14.3.
|
It is clarified that nothing in the provisions of this Section 14 above shall derogate from the rights of insurance and indemnification of the officers (including Mr. Zisser) vis-à-vis the Company and/or the Subsidiaries, insofar as such rights exist.
|
|
14.4.
|
It is further clarified that, as results from the provisions of this section above, all of the pending legal proceedings against the Company, including proceedings to which its officers and/or controlling shareholders are also party (including claims of the Holders of Existing Bonds and/or anyone on their behalf and/or of any other third party against the Company and/or officers of the Company and/or shareholders of the Company and/or anyone on their behalf, and including Class Action 20835-04-13 Eisenberg E. Management and Consultation Ltd. vs. Elbit Imaging Ltd.
et al
) will be dismissed with prejudice with no order for legal costs, on the Date of Consummation of the Arrangement.
|
15.
|
If the date set forth in this Arrangement Plan for the transfer of monies and/or payment of monies and/or transfer of securities and/or allotment of securities, is not both a Trading Day and a trading day on the NASDAQ Stock Market, such date will be postponed to the nearest Trading Day thereafter which is also a trading date on the NASDAQ Stock Market.
|
16.
|
During the period until the Date of Consummation of the Arrangement, the Trustees and the Company may, in writing:
|
|
16.1.
|
Incorporate changes into the New Trust Deeds for the purpose of (a) rendering the same compatible with this Arrangement Plan, and (b) rendering the same compatible with the provisions of the law, the requirements of TASE and the standard provisions in trust deeds used by the Trustees for the New Bonds, so that the provisions of the trust deeds are satisfactory to the Trustees, insofar as they deem necessary, provided that nothing in such changes shall modify the rights of any of the parties under this Arrangement Plan, other than in a negligible manner;
|
|
16.2.
|
Determine technical supplementary provisions pertaining to this Arrangement Plan (including the trust deeds), provided that nothing in such provisions shall prejudice the rights of any of the parties under this Arrangement Plan, other than in a negligible manner;
|
|
16.3.
|
Determine provisions with respect to issues pertaining to proof of rights in the Existing and/or New Bonds, provided that nothing in such provisions shall prejudice the rights of any of the parties under this Arrangement Plan, other than in a negligible manner;
|
|
16.4.
|
Decide to take other actions required in view of the change of the terms and conditions of the Existing Bonds and for consummation of the Arrangement, provided that nothing in such actions shall prejudice the rights of any of the parties under this Arrangement Plan, other than in a negligible manner.
|
17.
|
The granting and registration of the pledges that need be granted and registered in favor of the Trustees for the New Bonds and the Holders of the New Bonds under this Arrangement Plan, and receipt of the undertakings and guarantees from Elbit Ultrasound and Elscint, as specified above, shall be performed in a manner satisfactory to the Trustees for the New Bonds and via documents satisfactory to the Trustees for the New Bonds (including the pledge documents, opinions that the trustees for the Bonds shall demand in respect of the pledge and the validity thereof, the affidavit of an officer of the pledger (only with respect to facts), undertaking and guarantee documents from Elbit Ultrasound and Elscint and any other reasonable document to be demanded by the trustees for the bonds, all insofar as such documents (including the opinion and the required affidavit) are relevant, in a reasonable and acceptable form, and insofar as they can be furnished and in the form in which they can be furnished, and, for this purpose, the Trustees for the New Bonds shall be represented and shall obtain advice (each trustee may also demand to be obtain advice and representation separately from the Company), including legal advice, as per their choice, in Israel and abroad, considering the applicable laws concerning the granting and registration of such pledges and receipt of such undertakings and guarantees. It is clarified that the Pledges shall be registered under the applicable laws pertaining to the pledging entity and the pledged asset and that the Company will be responsible for and will bear all of the expenses pertaining to the registration of the Pledges and the receipt of such undertakings and guarantees; failure to register and grant the Pledges in the aforesaid manner and on the dates scheduled therefor in this Arrangement Plan or failure to grant the undertakings and guarantees in accordance with the aforesaid shall constitute a cause for acceleration of payment under the New Bonds.
|
18.
|
Without derogating from the provisions of the law and from the provisions of the Existing Trust Deeds, the Company shall bear, on an ongoing basis, the fees of the Trustees for the Existing Bonds and the representative bodies of the bondholders and the expenses of the Trustees for the bonds in connection with the period until the date of release of this Arrangement Plan (including the fees of their attorneys, expenses due to opinions obtained by the Trustees and any other expense). The Company shall also bear the fees of the Trustees and the representative bodies and the expenses of the Trustees as stated in connection with the period until the Date of Consummation of the Arrangement and in connection with any action to be required in respect of the Arrangement or its consummation. The Company shall further bear the legal expenses incurred by the Unsecured Financial Creditors in connection with the proceeding for the Arrangement and its approval, up to NIS 1.5 million, according to supporting evidence to be submitted up to 14 days following the Date of Consummation and according to a division to be determined. The Company shall also bear the expenses and fees of the Trustees for the New Bonds. In this framework, the Company shall bear the fees and expenses of the Trustees for the New Bonds in connection with the granting and registration of the pledges specified in the Arrangement plan in their favor and in favor of the Holders of New Bonds and in connection with receipt of guarantees and undertakings as aforesaid from Elbit Ultrasound and Elscint, including the fees of legal advisors and the attorneys of the Trustees for the New Bonds, as shall be appointed thereby both in Israel and abroad, considering the applicable laws pertaining to the granting and registration of such pledges and for receipt of such guarantees and undertakings.
|
NAME OF COMPANY
|
COUNTRY OF ORGANIZATION
|
DIRECT/INDIRECT OWNERSHIP PERCENTAGE
|
Plaza Centers N.V.
|
The Netherlands
|
62.5%
(1)
|
Elscint Holdings & Investment N.V.
|
The Netherlands
|
100%
|
Elbit Medical Technologies Ltd.
|
Israel
|
90%
(2)
|
Elbit Plaza India Real Estate Holdings Limited
|
Cyprus
|
50%
(3)(4)
|
Elbit Fashion Ltd.
|
Israel
|
100%
|
Elbit Ultrasound (Luxemburg) B.V./Sa r.l.
|
Luxemburg
|
100%
|
(1)
|
Approximately 58% on a fully diluted basis.
|
(2)
|
Approximately 85% on a fully diluted basis.
|
(3)
|
We hold 47.5% of the shares in EPI directly, and an additional 47.5% through PC. For additional information as to the joint venture signed between us and PC regarding EPI, see “Item 4.B Business Overview - Residential Projects.”
|
(4)
|
For details as to the grant of 5% of EPI’s equity to Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman."
|
1.
|
I have reviewed this annual report on Form 20-F of Elbit Imaging Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the resistant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/s/ Ron Hadassi | ||
Name:
|
Ron Hadassi
|
||
Title:
|
Chairman of the Board of Directors
|
1.
|
I have reviewed this annual report on Form 20-F of Elbit Imaging Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the resistant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By
:
|
/s/ Doron Moshe
|
||
Name:
|
Doron Moshe
|
||
Title:
|
Chief Financial Officer
|
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Ron Hadassi
|
||
Name:
|
Ron Hadassi
|
||
Title:
|
Chairman of the Board of Directors
|
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and
|
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Doron Moshe
|
||
Doron Moshe
|
||
Chief Financial Officer
|
Page
|
|
2
|
|
Condensed Financial Statements:
|
|
3-4
|
|
5
|
|
6-7
|
|
8-10
|
December 31
|
||||||||||||||||
2 0 1 3
|
2 0 1 2
|
2 0 1 3
|
||||||||||||||
Convenience translation
(note 2D)
|
||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||
Current Assets
|
||||||||||||||||
Cash and cash equivalents
|
120,483 | 30,637 | 34,711 | |||||||||||||
Short-term deposits and investments
|
11,603 | 44,608 | 3,343 | |||||||||||||
Other receivables
|
9,319 | 10,427 | 2,685 | |||||||||||||
141,405 | 85,672 | 40,739 | ||||||||||||||
Non-Current Assets
|
||||||||||||||||
Deposits, loans and other long-term balances
|
16,069 | 17,144 | 4,630 | |||||||||||||
Loans and investments in subsidiaries, associates and joint venture
|
1,668,989 | 2,922,636 | 480,838 | |||||||||||||
Property, plant and equipment
|
5,542 | 6,914 | 1,597 | |||||||||||||
Deferred expenses
|
94 | 1,563 | 27 | |||||||||||||
1,690,694 | 2,948,257 | 487,091 | ||||||||||||||
1,832,099 | 3,033,929 | 527,830 |
December 31
|
||||||||||||||||
2 0 1 3
|
2 0 1 2
|
2 0 1 3
|
||||||||||||||
Convenience translation
(note 2D)
|
||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||
Current Liabilities
|
||||||||||||||||
Short-term credits
|
2,639,286 | 757,351 | 760,382 | |||||||||||||
Payables and other credit balances
|
196,240 | 48,262 | 56,537 | |||||||||||||
2,835,526 | 805,613 | 816,919 | ||||||||||||||
Non-Current Liabilities
|
||||||||||||||||
Borrowings
|
- | 1,903,687 | - | |||||||||||||
Other liabilities
|
29,213 | 33,119 | 8,416 | |||||||||||||
Liabilities related to discontinued operations
|
- | 2,616 | - | |||||||||||||
29,213 | 1,939,422 | 8,416 | ||||||||||||||
Commitments, Contingencies, Liens and Collaterals
|
||||||||||||||||
Shareholders' Equity
|
||||||||||||||||
Share capital and share premium
|
927,228 | 907,296 | 267,136 | |||||||||||||
Reserves
|
(704,519 | ) | (509,222 | ) | (202,973 | ) | ||||||||||
Retained earnings
|
(1,086,828 | ) | 59,341 | (313,117 | ) | |||||||||||
Treasury stock
|
(168,521 | ) | (168,521 | ) | (48,551 | ) | ||||||||||
(1,032,640 | ) | 288,894 | (297,505 | ) | ||||||||||||
1,832,099 | 3,033,929 | 527,830 |
Doron Moshe
Chief Financial Officer
|
Zvi Tropp
Chairman of the audit committee
|
Ron Hadassi
Chairman of the board
|
Year ended December 31
|
||||||||||||||||||||
2 0 1 3
|
2 0 1 2
|
2 0 1 1
|
2 0 1 3
|
|||||||||||||||||
Convenience
translation
(Note 2D)
|
||||||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||||||
Revenues from providing management services
|
2,265 | 30,629 | 2,268 | 653 | ||||||||||||||||
General and administrative expenses
|
(58,964 | ) | (50,749 | ) | (60,752 | ) | (16,988 | ) | ||||||||||||
Financial expenses, net
|
(117,616 | ) | (139,531 | ) | (122,187 | ) | (33,887 | ) | ||||||||||||
Initiation expenses
|
(438 | ) | (1,114 | ) | - | (126 | ) | |||||||||||||
Other income (expense)
|
2,460 | (44,177 | ) | 1,448 | 709 | |||||||||||||||
Loss before income taxes
|
(172,293 | ) | (204,942 | ) | (179,223 | ) | (49,640 | ) | ||||||||||||
Income tax expenses
|
6,298 | 3,500 | - | 1,814 | ||||||||||||||||
(178,591 | ) | (208,442 | ) | (179,223 | ) | (51,454 | ) | |||||||||||||
Company's share in results of investee companies
|
(980,548 | ) | (134,896 | ) | (95,433 | ) | (282,497 | ) | ||||||||||||
Loss from continuing operations
|
(1,159,139 | ) | (343,338 | ) | (274,656 | ) | (333,952 | ) | ||||||||||||
Profit from discontinued
operations, net
|
3,494 | 27,592 | 9,737 | 1,007 | ||||||||||||||||
Profit (loss) for the year
|
(1,155,645 | ) | (315,746 | ) | (264,919 | ) | (332,945 | ) |
Year ended December 31
|
||||||||||||||||
2 0 1 3
|
2 0 1 2
|
2 0 1 1
|
2 0 1 3
|
|||||||||||||
Convenience
translation
(Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||
Purchase of property plant and equipment, investment property and other assets
|
(984 | ) | (1,751 | ) | (6,738 | ) | (283 | ) | ||||||||
Proceeds from realization of investments in subsidiaries and associates
|
169,698 | 36,529 | - | 48,890 | ||||||||||||
Investments and loans to subsidiaries and associates
|
(59,242 | ) | 198,272 | (134,667 | ) | (17,068 | ) | |||||||||
Proceed from realization of long-term deposits and long-term loans
|
100 | 9,461 | - | 29 | ||||||||||||
Interest received in cash
|
2,697 | 5,945 | 8,594 | 777 | ||||||||||||
Short-term deposits and marketable securities, net
|
34,081 | 74,236 | 323,601 | 9,819 | ||||||||||||
Net cash provided by continued investing activities
|
146,350 | 322,692 | 190,790 | 42,164 | ||||||||||||
Net cash provided by (used in) discontinued investing activities
|
- | - | - | - | ||||||||||||
Net cash provided by investing activities
|
146,350 | 322,692 | 190,790 | 42,164 | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||
Dividend received
|
- | - | 135,077 | - | ||||||||||||
Repurchase of debentures and treasury stock
|
- | - | (25,501 | ) | - | |||||||||||
Interest paid in cash
|
(20,911 | ) | (177,217 | ) | (168,867 | ) | (6,024 | ) | ||||||||
Proceeds from long-term borrowings
|
- | - | 414,172 | - | ||||||||||||
Repayment of long-term borrowings
|
- | (329,220 | ) | (311,949 | ) | - | ||||||||||
Repayment of short-term credit
|
(54,840 | ) | (133 | ) | (308,582 | ) | (15,799 | ) | ||||||||
Net cash used in continued financing activities
|
(75,751 | ) | (506,570 | ) | (265,650 | ) | (21,824 | ) | ||||||||
Net cash used in discontinued financing activities
|
- | - | - | - | ||||||||||||
Net cash used in financing activities
|
(75,751 | ) | (506,570 | ) | (265,650 | ) | (21,824 | ) | ||||||||
Increase (decrease) in cash and cash equivalents
|
85,489 | (187,450 | ) | (53,700 | ) | 24,630 | ||||||||||
Cash and cash equivalents at the beginning of the year
|
30,637 | 217,642 | 265,745 | 8,827 | ||||||||||||
Net effect on cash due to currency exchange rate changes
|
4,357 | 445 | 5,597 | 1,255 | ||||||||||||
Cash and cash equivalents at the end of the year
|
120,483 | 30,637 | 217,642 | 34,711 |
|
A.
|
Elbit Imaging Ltd. ("the Company") was incorporated in Israel. The Company's registered office is at 5 Kinneret Street Bney-Brak, Israel. The Company's shares are registered for trade on the Tel Aviv Stock Exchange and in the United States on the NASDAQ Global Select Market.
|
|
B.
|
The Group engages, directly and through its investee companies, in Israel and abroad, mainly in the following areas:
|
|
·
|
Commercial and entertainment centers
- initiation, construction, and sale of shopping and entertainment centers and other mixed-use property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India. In certain circumstances and depending on market conditions, the Group operates and manages commercial and entertainment centers prior to their sale.
|
|
·
|
Hotels
- hotels operation and management, primarily in major European cities. For the sale of the Group’s hotels in Netherland, see note 11C of the annual consolidated financial statements.
|
|
·
|
Medical industries and devices
- (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment, and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine.
|
|
·
|
Residential projects
- initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India.
|
|
·
|
Fashion apparel
- distribution and marketing of fashion apparel and accessories in Israel. With respect to the selling of GAP operation, see note 10E of the annual consolidated financial statements.
|
|
·
|
During 2012, the Company finalized a transaction to sale all its investments in commercial centers in the US (see note 24B of the annual consolidated financial statements) and lost control over its holding in a subsidiary that operates in the medical industry (see note 8A(2) of the annual consolidated financial statements). Accordingly, these operations are presented in these financial statements as discontinued operations.
|
|
C.
|
Financial position:
With respect to the Company's financial position, including the consummation of the plan of restructuring, see note 3 of the annual consolidated financial statements.
|
|
D.
|
Definitions:
|
The Company
|
-
|
Including Elscint
|
Elscint
|
-
|
A formerly 100% subsidiary of the Company, merged with the Company in 2010.
|
Group
|
-
|
The Company and its Investees
|
Investees
|
-
|
Subsidiaries, joint ventures and associates
|
PC
|
-
|
Plaza Centers N.V. Group, a material subsidiary (62.5%) operating
in the field of commercial and entertainment centers.
|
Elbit Medical
|
-
|
Elbit Medical Technologies Ltd., a public Israeli company traded on the TASE, as for December 31, 2013, the Company holds 85% of Elbit Medical on a fully diluted basis.
|
Insightec Ltd.
|
-
|
As of December 31, 2013, an associate (48.7%) operating
in the field of development, manufacturing and marketing of medical treatment systems (see note 10A of the annual consolidated financial statements).
|
Related parties
|
-
|
As defined in International Accounting Standard ("IAS") no. 24. For details see note 22 of the annual consolidated financial statements
|
|
A.
|
Statement of compliance:
The condensed financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as issued by the International Accounting Standards Board ("IASB").
|
|
B.
|
Basis for preparation:
The condensed financial statements have been prepared on the historical cost basis except for (i) financial instruments measured at fair value; (ii) certain trading property measured at net realizable value; (iii) certain property, plant and equipment (hotels) presented at the revaluation model (based on fair value) and (iv) investment property measured at fair value The principal accounting policies are set out below. See note 2AC of the consolidated financial statements for critical judgments in applying accounting policies and use of estimations.
|
|
C.
|
Presentation of the income statements:
The Groups operations are characterized by diverse activities. Accordingly, management believes that its income statements should be presented in the “Single - step form”. According to this form, all costs and expenses (including general and administrative and financial expenses) should be considered as continuously contributing to the generation of the overall revenues and gains. Management also believes that its operating expenses should be classified by function to: (i) those directly related to each revenue (including general and administrative expenses and selling and marketing expenses relating directly to each operation); and (ii) overhead expenses which serve the business as a whole and are to be determined as general and administrative expenses.
|
|
D.
|
Convenience translation:
The balance sheet as of December 31, 2013 and statement of income, statement of other comprehensive income and statement of cash flows for the year then ended have been translated into U.S. Dollar using the representative exchange rate as of that date ($1= NIS 3.471). Such translation was made solely for the convenience of the U.S. readers. The dollar amounts so presented in these financial statements should not be construed as representing amounts receivable or payable in dollars or convertible into dollars but only a convenience translation of reported NIS amounts into U.S. Dollar, unless otherwise indicated. The convenience translation supplementary financial data is unaudited and is not presented in accordance with IFRSs.
|