Alon Blue Square Israel agrees to undertaking with debenture holders

By Caroline Salls

Pittsburgh, Sept. 11 – Alon Blue Square Israel Ltd. entered into an undertaking agreement with the holders of its series C debentures, according to a news release.

The terms of the agreement include the following:

• The company will make only ongoing payments on account of principal, interest and linkage to its financial creditors, subject to the understandings with bank lenders as part of the court-approved plan of recovery of Alon Blue subsidiary Mega Retail Ltd., and in accordance with the company’s debentures;

• Alon Blue will notify the bondholders’ trustee of its intention to enter into an arrangement with any financial creditor, change the terms of loans or credit, obtain new credit in excess of NIS 5 million and/or an intention to amend or grant guarantees or security to secure the debt owed by the company to financial creditors.

It company will also notify the trustee before it agrees to dispose of rights in material assets, subject to limited exceptions;

• Alon Blue will notify the trustee in advance of the imposition of liens on assets to secure existing debt to financial creditors, the acceleration of payments of principal to financial creditors, any exceptional preference granted to a financial creditor, investments in Mega Retail and/or grant of guarantees to creditors of Mega Retail not contemplated in the Mega Retail plan of recovery, grant of guaranty in favor of financials creditor of a company subsidiary and any new extraordinary transaction between the company and its controlling shareholder or a transaction in which the controlling shareholder has a personal interest; and

• The company will not distribute dividends without prior approval of the bondholders’ representative.

Alon Blue said it also agreed to cooperate with the trustee and deliver relevant information to enable bondholder representatives to review the company’s financial status and any plans to sell assets, extend or receive loans from affiliated companies and/or reach an agreement with creditors.

The undertakings are applicable until the earliest of notification by the trustee of termination of negotiations; seven days after notification by the company to the trustee, with some undertakings continuing for a longer period; a decision to demand full or partial repayment of the debt owed to the bondholders by the company; and initiation of legal actions by the trustee against the company.

Based in Rosh Ha'Ayin, Israel, Alon owns and operates supermarkets and specialty stores.

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