GFI Offers Worse Debt Deal to Bondholders as Deadline Looms
Translated & summarized from Calcalist by baba
GFI, a real estate company owned by Alan Gross, has presented a revised debt settlement to bondholders with worsened terms, facing a December deadline to repay NIS 170 million. The company is also indebted to Apollo for NIS 440 million, which has first lien on GFI's hotel assets. The new proposal eliminates a cash payment to bondholders and replaces collateral with personal guarantees, while demanding approval within a week. An alternative acquisition offer from Triumph Hotels is also being considered.
The story in 6 lines · by baba
- GFI offers bondholders a worse debt settlement, eliminating cash payments and delaying repayment to December 2029.
- The company faces a December deadline to repay NIS 170 million to Series H bondholders.
- Apollo, a senior lender, is owed NIS 440 million and may demand immediate repayment.
- The controlling shareholder offers personal guarantees totaling $6.3 million and a Colorado asset.
- GFI demands bondholder approval for the revised settlement within one week.
- Triumph Hotels has made an initial offer to acquire GFI and inject $15 million.
GFI, a real estate company owned by American-Jewish developer Alan Gross, has presented a revised debt settlement proposal to its bondholders that offers less favorable terms than its August offer. The company, which owns properties including the Seville Nomad hotel in Manhattan operated by Hyatt, faces a December deadline to repay NIS 170 million ($46 million) to holders of its Series H bonds. However, GFI is unable to meet this obligation, compounded by a NIS 440 million ($118 million) senior debt owed to the American real estate financier Apollo, which also matures in December and has first lien on the hotel's assets.
Apollo has indicated it may demand immediate repayment if a signed agreement between GFI and its bondholders is not reached. GFI had initially sought a three-year loan extension from Apollo, but Apollo's willingness to grant this is contingent on a bondholder agreement. Meanwhile, holders of the unsecured Series V bonds, owed NIS 92 million ($25 million) starting in February 2029, face significant risk, reflected in their bond yields of 90% compared to Series H's 1,000%.
The original August settlement proposal included a cash payment of NIS 85 million ($23 million) to Series H bondholders and a unified repayment date of December 2029 for the remaining Series H and all Series V debt. It also offered a second lien on another New York hotel as collateral. The new proposal eliminates the cash component for Series H, deferring the entire repayment to December 2029, and postpones some interest payments. The collateral offer is replaced by personal guarantees from the controlling shareholder totaling $6.3 million and the transfer of a Colorado asset to the company.
Additionally, GFI seeks bondholder approval for a new $25 million debt issuance to partially repay Apollo and secure concessions. The company is demanding bondholder approval within one week, creating a dilemma: accept the worsened terms or risk Apollo foreclosing on the hotel, potentially jeopardizing the bondholders' security. An alternative proposal from Triumph Hotels to acquire GFI and inject $15 million to extend debt maturities is also under consideration, though its prospects are unclear.
GFI, established in 2014 in the British Virgin Islands, has raised approximately NIS 1.2 billion ($320 million) in Israel since 2015 through six bond series, repaying four in full. In March, S&P Maalot revised the company's outlook to negative due to concerns about its financial and operational improvements, though it noted the controlling shareholder's history of meeting debt obligations. Despite past assurances, the significant shift from offering partial repayment to no cash payment in the latest proposal has eroded investor confidence.