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Boymelgreen's woes pile up
By Michael Rochvarger
Tags: Bank Leumi, Shaya Boymelgreen

Engel Europe's financial reports for 2007 are anything but good news for controlling shareholder Shaya Boymelgreen's Langa Holdings. Engel lost NIS 75 million, up drastically from losses of NIS 4 million in 2006.

Among the causes cited by the reports for the losses, including NIS 16 million in provisioning for a decline in the value of residental construction lots in Germany and NIS 3 million in provisioning for various lawsuits faced by Engel Eastern Europe. That company trades on London's Alternative Investment Market (AIM) exchange.

Engel also recorded depreciation and provisioning for some of its Israeli activities, without giving numbers. It probably is connected to the 262-residence project in Moshav Matzliach Engel had planned to build with Heftsiba. When Heftsiba declared bankruptcy in August 2007 it left the project with a big deficit.
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Following Heftsiba's collapse, Bank Leumi sued Heftsiba and Engel to pay off the bonds provided as security for the funds and credit extended by the bank to the two partners for this project.

Now Leumi is demanding that Engel General Developers pay off the project's deficit, while Engel feels that Leumi should cover the deficit. Engel and Leumi representatives have met to hammer out a solution, while Engel General has already made provisions in its financial reports for "the sums the company is likely to bear," without mentioning any figures. Added to these woes is the reexamination of Engel Europe's series C negotiable bonds, currently rated A stable, by Maalot Israel Securities Rating Company.

Engel Europe had promised Maalot to maintain a ratio of at least 2 between the market value of its holdings plus its liquid portfolio, and the financial obligations in the company's reports. Engel is not meeting this commitment due to the decline in the share price of subsidiary Engel Resources and Development.
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