Jerusalem – Africa Israel Investments Hit By Russian Economic Woes

Jerusalem – Israeli property developer Africa Israel Investments, whose Russia-focused subsidiary AFI Development has been hit hard by the weak Russian economy, reported on Sunday that it made a first-quarter loss.

Africa Israel posted a net loss for the quarter of 41 million shekels ($10.7 million), which compared with a profit of 9 million shekels in the first three months of 2015.

London-listed AFI, which is 65 percent owned by Africa Israel, recorded a $32 million loss for the first three months of the year, and the worsening situation has prompted Russian bank VTB to call for early repayment of a $611 million loan to AFI Development for projects including the AFI Mall in Moscow.

Alternatively, the parties are examining the possibility of the loan being paid off with the bank taking possession of a number of substantial assets.

Africa Israel said last week it was seeking a debt settlement with bondholders for the second time since 2010. It has 3.1 billion shekels in Israeli bonds to be repaid.

“This decision is necessary and we will take all steps needed, both structural and managerial, to adjust business and organizational operations to this complicated reality,” said Africa Israel Chief Executive Avraham Novogrocki.

The company has blamed the deterioration on the Russia-Ukraine conflict that resulted in international sanctions, combined with the fall in oil prices and a sharp devaluation in the rouble.

Following the global financial crisis of 2008 Africa Israel defaulted on a series of bonds and in 2010 it restructured 7.4 billion shekels of debt.

Africa Israel said that following its previous debt restructuring it sold off assets worth 6.7 billion shekels and redeemed debt of 4.8 billion shekels. ($1 = 3.8445 shekels).