Michman Credit for Business announced that it has entered into a credit facility agreement with the Ayalon Insurance Group, in the total amount of NIS 20 million, for the purpose of increasing the company’s credit sources, expanding its scope of operations and increasing its credit portfolio. And will allow Michman to increase its credit portfolio by about NIS 100 million, which constitutes about 33% of the current credit portfolio. The full amount of the credit will be repaid on 1.1.2026.
According to the agreement, the loan will be inferior to the Company’s Series A debentures and to the Company’s loan agreements with the banks and its repayment will be inferior to the repayment of the Company’s debentures and the repayment of the Company’s debts to the banks. The loan will bear a fixed interest rate of 4.9% per annum and will be paid at the end of each calendar quarter plus a management fee and other fees as is customary in such agreements.
In addition, the Company will allocate to the Ayalon Group 8,500 warrants that can be exercised for 8,500 ordinary shares of 0.01 par value of the company. The options will be exercisable until July 2023 when the exercise price for each option is NIS 2,129 and according to NIS 300 million, about 32% higher than the company’s value today. As the warrants are exercised for ordinary shares of the company, Ayalon is expected to hold Michman’s shares at a rate of about 5%.
To the extent that the warrants are not exercised during the exercise period by Ayalon Insurance, the interest rate will increase by 4%, starting from the end of the exercise period. To the extent that the warrants are only partially exercised, a partial interest increase will apply, respectively. To the extent that the option is not exercised during the exercise period, the Company will pay, in a one-time payment on the final repayment date, a non-exercise commission option at the rate of 1.9% of the loan principal. Ayalon Insurance was led by Rona Yosef Abutbul, vice president, director of the investment division, and Itai Dayan, director of the credit system.
Doron Sapir, Chairman of the Company and Yaniv Bitton, CEO of Michman Business Credit: “The financing agreement with the Ayalon Insurance Group, one of the leading institutional entities in Israel, is a very strong expression of confidence in the company’s financial management, compliance with all its obligations and the potential to expand the Michman Group’s activities in the coming years. Building a strong and professional long-term infrastructure. “
Since the beginning of the year, Michman’s credit portfolio has grown by approximately 170% and amounted to approximately NIS 265 million on September 30, 2021. In November, the volume of the credit portfolio amounted to approximately NIS 300 million, an increase of approximately 206% since the beginning of the year.
The company’s capital resources increased in the first nine months of 2021 to approximately NIS 292 million, compared with capital sources amounting to approximately NIS 101 million in 2020. Diversification of credit sources, bond issuance and agreements with the banking system reduced the weighted cost of capital Of the company from about 8.5% at the end of 2020 to about 3.98% at the end of the third quarter of 2021 – a figure that emphasizes the reduction of the company’s capital costs following its becoming public and the company expects this process to continue.