Revealed in court: Zeevi Holdings lost NIS 143m in 2000

Auditors say some Zeevi group companies have working capital deficit, cash flow woes
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Zeevi Holdings, the privately-held corporation through which tycoon Gad Zeevi rules his business empire, lost NIS 143 million in 2000, has learned.

This datum appears in financial statements delivered to the Tel Aviv District Court, which is hearing a petition filed by Union Bank of Israel to liquidate Zeevi Holdings and its subsidiary, Zeevi Trust and Financing, due to nonpayment of an NIS 8.3 million debt.

The financial statements show that in 2000, business took a real turn for the worse. Zeevi Holdings has interests in Ace Buy & Build, Auto Depot, the Bulgarian airline Balkan Air, Trans-Clal, and Tel Aviv-traded companies Malam Systems and Zeevi Computers.

In 1999, Zeevi Holdings netted NIS 64.4 million, after losing NIS 19.5 million in 1998. Then, as said, in 2000 it lost NIS 163 million.

Note that Zeevi's 20% holding in the Bezeq phone company did not appear in the Zeevi Holdings statement.

The company's auditors note that some of the Zeevi group companies are operating with a working capital deficit and have cash flow difficulties. Banks are meaning complaining of defaults on financial commitments. Zeevi is meanwhile negotiating debt arrangements with the creditor banks.

At year-end 2000, Zeevi Holdings' book value stood at NIS 351 million, compared with NIS 496 million at year-end 1999. Its consolidated book value stood at NIS 1.42 billion at the end of last year.

The financial statement also reveal that by year-end 2000, Zeevi Holdings had invested about NIS 99 million in Balkan Air, in which it has a 75% interest. Zeevi got into the airline together with the Borovich family, which controls the Israeli aviation group Knafaim. But the Boroviches got out at the end of 1999, leaving Zeevi to handle Balkan and the Bulgarian government by himself.

After feuding with the Bulgarian privatization authority, Zeevi sued for $230 million damages. No defense has been filed yet, but the Bulgarian government claims that the Zeevi group failed to meet investment commitments, and countersued for $8.6 million in compensation.

Meanwhile, Balkan Air is in receivership, leading the Zeevi group to stop consolidating its results with the carrier, and to write off its investment.

As of year-end 2000, Zeevi Holdings had NIS 162 million short-term credit and NIS 221 million long-term credit, consolidated. Its bond commitments stood at NIS 66 million.