Absent stay, Ampal-American unit's credit facility could be terminated

By Caroline Salls

Pittsburgh, Sept. 4 - The automatic stay imposed by Ampal-American Israel Corp.'s bankruptcy filing is protecting the company from possible termination of or default on a credit facility between Israel Discount Bank Ltd. (IDB) and Ampal indirect wholly owned subsidiary Merhav-Ampal Group, Ltd., according to an 8-K filed Tuesday with the Securities and Exchange Commission.

Absent the stay, the bankruptcy filing could also result in the acceleration of the debt under the facility, which was originally divided into two equal loans of $43.7 million.

The company said interest on both loans accrues at Libor plus 300 basis points.

According to the 8-K, $16.7 million held by Merhav-Ampal in an IDB bank account was set off by IDB on Aug. 30 in accordance with an irrevocable written undertaking provided on Dec. 31, 2007.

Ampal-American is a guarantor to the set off. IDB claims the bankruptcy filing constitutes a breach of the undertaking, which would allow IDB to set off all monies held by Merhav-Ampal and would also allow IDB to accelerate payment of all of the facility debt.

Ampal-American said it and Merhav-Ampal are currently evaluating all of their options, including possible legal actions, in connection with IDB's notice.

Ampal-American Israel, a Tel Aviv-based holding company, filed for bankruptcy on Aug. 29 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 12-13689.

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