Israel's Elbit unit enters NIS 75 million bond structured transaction

By Angela McDaniels

Tacoma, Wash., Aug. 2 - Elbit Imaging Ltd. said that Elbit Imaging Financing Services, LP purchased an Israeli shekel-denominated zero-coupon credit-linked note due Oct. 2, 2013 from a financial institution ("the counterparty") under a NIS 75 million bond structured transaction.

The credit-linked note references a portfolio of Elbit Imaging's bonds with a market value of NIS 75 million, according to a company news release.

Elbit Imaging repurchased the bonds under a May 23, 2011 repurchase program and sold them to Elbit Financing, which then sold the portfolio to the counterparty. The counterparty paid the market value of the bond portfolio and issued the credit-linked note at an issue price of NIS 37.5 million.

During the term of the credit-linked note, the counterparty will retain all of the proceeds derived from the bond portfolio. At maturity, it will deliver the remaining, unamortized portion of the bond portfolio to Elbit Financing.

The note can be terminated early under certain circumstances, such as if the market value of the bond portfolio falls below a threshold level. If an early termination event occurs, the credit-linked note will be redeemed, and Elbit Financing will receive a cash settlement amount derived from the then-prevailing bid price of the bond portfolio.

Elbit Financing is a partnership owned and controlled by Elbit Imaging. Tel Aviv-based Elbit Imaging is a holding company with activities in the fields of commercial and entertainment centers, hotels, image-guided treatment, residential real estate and fashion retail.

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