ISA opens probe into Yoel Goldman's All Year Holdings
US company All Year Holdings raised over NIS 2 billion from Israeli investors, who have presented the debt for immediate repayment.
The Israel Securities Authority (ISA) has opened an
investigation into US company All Year Holdings Ltd. (TASE: ALYR), which has
bonds traded on the Tel Aviv Stock Exchange. The company deals in income
producing real estate in New York, and is owned by Yoel Goldman, who is based
in New York. The company raised over NIS 2 billion from Israeli investors, and
it has encountered difficulties in making payments due to the bondholders.
Yoel Goldman is not only the controlling shareholder, but
also chairman of the company, and he was also president until its collapse. In
practice, he has run the company since its debt offering in Tel Aviv, but he
has not visited Israel for a long time. ISA investigators will therefore face a
challenge in trying to question him about the events that led to the collapse
of the company. Any possible trial will also be difficult as long as he chooses
not to come to Israel.
All Year Holdings collapsed with debt of NIS 2.5 billion to
its bondholders. The secured bondholders (series 3 and 5) decided last month to
present the entire debt to them for immediate repayment. The holders of two
unsecured series of bonds backed the decision. The secured bonds are mainly
held by financial institutions, while the holders of the unsecured bonds are
mainly private investors.
All Year Holdings reported the opening of the ISA
investigation to the Tel Aviv Stock Exchange on Friday. The ISA's demand for
documents pursuant to the investigation of possible breaches of the Securities
Law was made to the company's representative office in Israel. If the
investigation uncovers suspicious material, inquiries will be made in the US in
coordination with the US authorities. All Year Holdings' CEO is Assaf Ravid,
who took up the post at the same time as the investigation was opened, and its
CFO is Yizhar Shimoni, an Israeli who does not live in Israel.
All Year Holdings deals in residential rentals, buying,
renovating and managing residential apartment buildings in Brooklyn in New
York. Its assets are dispersed over the Williamsburg, Bushwick, and Crown
Heights neighborhoods and elsewhere in the borough.
In January, four directors of All Year Holdings announced
their resignations. The man behind the company, Yoel Goldman, is a member of
the Satmar hasidic community in Brooklyn, and is one of the largest and most
influential real estate developers in the borough, which has become trendy in
recent years. One of the representatives of the Israeli financial institutions
who toured the company's properties before investing in it said at the time,
"His buildings are amazing, among the finest I've seen. I'd move there
today. There's no doubt that he understands real estate."
Last December, financial sanctions were imposed on All Year
Holdings and its CEO relating to infringements in 2018. This was after it
emerged that $3.7 million that was supposed to have been transferred to the
company was in fact used to repay a loan on a property owned by Goldman. The
"error" was discovered only after several months. Goldman was
required to repay the money to the company plus interest. He was fined NIS
250,000 and the company NIS 600,000, and Goldman was forbidden to be an
officeholder in a company for nine months.
Two years ago, amid newspaper reports and problematic
notifications to the Tel Aviv Stock Exchange, Entropy, a Tel Aviv consultancy
that provides services to financial institutions, released a report that showed
All Year Holdings' financial position in a very bad light. According to
Praedicta, a fintech company that specializes in financial intelligence, the
institutions with the largest bondholdings in the company are Meitav Dash, with
holdings of some NIS 200 million in the various bond series, Clal (some NIS 180
million), and Migdal and The Phoenix, (about NIS 140 million each). Some of the
shekel-euro exchange rate holdings represent the public's pension savings.
Shortly afterwards, Entropy published a report indicating
corporate governance failures at All Year Holdings. The company was already in
a difficult financial situation. Entropy found that All Year Holdings had
liquid assets of just $44 million, and a small number of unmortgaged properties
worth little. At the same time, the company's leverage was very high indeed,
close to the upper limit set by the financial covenants on the basis of which
it raised debt.
Yields on the company's bonds became very high, indicating
that investors saw the chances of it repaying its debts as low - and Entropy
estimated that it would have a negative value in a quick liquidation, that is,
the money raised would be insufficient to cover its debts. Only in December
2018, after All Year Holdings' bonds had been traded at double-digit yields for
a month, did Midroog cut the rating for its bonds.
Two years later came the coronavirus pandemic, and last
November All Year Holdings had to halt a NIS 109 million payment due to the
bondholders. The bonds plummeted 40%. Goldman asked the investors to be
patient, saying he believed in the company, and he even injected cash into it.
He said that before the pandemic broke out a large sale of assets was in the
offing, and also a refinancing deal, but that these had not gone ahead because
of the coronavirus crisis.
A source from among the bondholders said, "All Year has
no corporate governance. Decisions are made by Goldman behind the scenes, and
he does whatever he likes. He made commitments under the table to
businesspeople from the haredi community, and managed the company like a private
kiosk."
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