Optibase Ltd. (NASDAQ:OBAS) today announced that it had entered into a CHF 100 million bank loan refinancing with Credit Suisse for the Company's Centre de Technologies Nouvelles (CTN) office building complex in Geneva, Switzerland (the " Property"). The refinancing was undertaken by OPCTN S.A., a Luxembourg company owned 51% by Optibase and 49% by The Phoenix Insurance Company Ltd and The Phoenix Comprehensive Pension (collectively, “ The Phoenix”) and by OPCTN's subsidiary, Eldista GmbH which is the owner of the Property.
Under the new financing agreements, Credit Suisse provided loans to OPCTN and Eldista which replaced a mortgage loan that Credit Suisse provided to Eldista in 2010 which had an outstanding balance of CHF 83 million. The combined interest rate of the new loans represents a 97 basis-point discount compared with the interest rate that Credit Suisse charged in the 2010 mortgage loan. The loans are amortized at a rate of CHF 2 million per year and are secured by a first mortgage over the Property and by a pledge of Eldista's shares.
Commenting on the transaction, the CEO of Optibase, Amir Philips, said, “We are very pleased with the refinancing which brought into play our knowledge of the local banking system and emphasizes our advantages operating in the Swiss market, moreover in light of the recent global economic crises. The refinancing will allow us and our partners (51% and 49% respectively) to retrieve approximately CHF 15 million of the equity initially invested in the acquisition. The refinancing will increase our overall liquidity and reduce principal payments by a total of CHF 3.75 million over the next four years period. Based on current interest rates and net of loan expenses, we also expect a reduction of interest expenses by approximately CHF 2.1 million, resulting in an overall expected improvement to cash flows due to the refinancing of approximately CHF 5.8 million for the four years period.” Mr. Philips concluded, “we are very proud of this significant achievement and will continue our efforts improving our business in all aspects bringing value to our business partners and shareholders.”