AFI may transfer 20% of Russian unit to bondholders

Real estate developer Africa Israel Investments (AFI) could transfer up to 20% of its 71%-owned Russian property development unit, AFI Development, to its bondholders as part of a plan to restructure its debt.

In a statement to the Israeli stock exchange the Israeli conglomerate said it has reached a deal with its bondholders to restructure its 7.5 bn shekels (EUR 1.34 bn) of debt. As part of the deal reached last Friday, Lev Leviev, majority shareholder in AFI, will reduce his stake in the company from 75% to 52.8%.

The agreement also envisages that AFI will issue two new series of bonds and distribute 1.2 bn shekels (EUR 216 mln) of shares in two of its subsidiaries in exchange for its existing debt. In particular, the company will transfer a stake of 16-20% in AFI Development and a 13% stake in Africa Israel Properties to its debt holders.

Listed on the London stock exchange, AFI Development is a developer of large-scale projects in Moscow, the Russian regions, Ukraine and the CIS. The company, which was established in 2001, posted a gross profit of $277 mln (EUR 188 mln) in the first half of 2009.