After a 40% fall in the stock since its issuance last year, the infrastructure fund reported beam On the delay in raising planned debt in the issuance of bonds – a delay that reflects, among other things, the growing distress in the corporate market, given the increase in interest rates and the increasing selectivity of investors.
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Aloma reports that it “continues to hold contacts with institutional bodies, with the aim of exhausting the possibility of issuing the bonds by virtue of the fund’s shelf prospectus.” According to sources close to the fund, Aloma is required to postpone the tender in order to add an institutional body that will purchase about a quarter of the goods, and is working to change the terms of the trust deed.
Aloma is a relatively small fund, currently trading at a value of NIS 152 million, less than half of the net value of its assets (NAV), which it estimates at NIS 338 million, as of the end of June this year. Chairman of the Foundation, Uri Yogev, previously held senior positions in the public service, among others as director of the Government Companies Authority, and before that as head of the budgets department at the Treasury. The CEO of Aloma is Yanon Yogev (no family connection).
Out of a planned fundraising of 150 million shekels, the fund earmarks approximately 85 million shekels (24 million dollars) for the purpose of completing the purchase of the controlling shares in the communications infrastructure company Tamers Telecom from the billionaire Poyo Zabaldovich.
Aloma bonds are issued without rating, with a 3.5-year maturity, and they will carry a high interest rate estimated at at least 8% per year. As collateral, Aluma offers 82% of the shares of Tamers Telecom (after the completion of the transaction) at a fair value of NIS 280 million. It also undertakes that its leverage (LTV) will not exceed 55%.
It is not yet known what the interest rate will be at which the tender will be closed, and whether the participation of the institutional body spoken of by those close to the offering will improve the terms of the recruitment and ensure its completion. However, it can be stated that the terms of the bond issuance are extreme even in the current market conditions, and indicate how much the corporate market in Tel Aviv is drying up for companies that issue without ratings or with low ratings.
The fight over Egged
In November of last year, a year and a half after its establishment, Aloma raised NIS 80 million in an initial public offering of shares, and it currently has no bonds issued. A month after the completion of the fundraising on the stock exchange, Chairman Yogev expressed optimism regarding the fund’s future. In an interview with Globes, he stated that “Aloma is focused on the sectors of communication infrastructure, green energy, transportation and environmental quality, and we think it will be a fund worth billions of shekels in the future.” As mentioned, this scenario is far from happening in the meantime.
Apart from its main investment in Tamers Telecom, since its inception, Aluma has invested in a number of companies operating in the fields of building cellular communication towers, energy efficiency and waste treatment.
Along with those relatively small investments, earlier this year Aloma competed for the acquisition of control of the public transportation company Egged, as part of a group that also included the car importer Carso Motors and the Migdal Insurance group. The group’s offer was the highest in the tender, and envisaged a huge value of NIS 5.6 billion for the group, but it fell quickly after the selling company tightened the terms of the tender, demanding an advance deposit of 15% of the consideration in cash – a demand that the group refused.
Want another 40% from Tamaras
As mentioned, Aloma’s current debt raising is intended to finance for it the completion of the purchase of Tamares Telecom shares from the Tamares Group of Zbadlovich. Tamers Telecom provides Internet services on a submarine cable between Israel and France, and intends to expand it through a land deployment to Eilat and from there deploy it to Asia.
Aloma entered into an investment in Tamaras Telecom in March of last year, when it purchased 42% of the shares for about 18 million dollars, and now it is working to increase its holdings by another 40%, and to reach control. During the time that passed, improvements were made in Tamaras, which included, among other things, the injection of capital, the expansion of infrastructure and new transactions, which, according to Aloma, more than tripled its value to 98 million dollars.
In exchange for the balance of Tamaras shares, the fund is supposed to pay $40 million, $24 million in cash and the balance in Aloma shares, at a price of 1.27 shekels per share – more than double the market price of the share (59 shekels), which is intended to reflect the net asset value of the company.
Tamers Telecom completed the first half of 2022 with revenues of $10.6 million, a 46% increase compared to the corresponding half. The company closed the half with a profit of 938 thousand dollars, against a loss of about one million dollars in the first half of last year. According to Aluma reports, the increase in revenue was due to an increase in demand for Tamras’ communication services among its existing customers.