Cohan Properties Reveals Additional $4 Million Debt Contrary to Previous Claims
Cohan Properties, a BVI company controlled by Mike Cohan, saw its bonds plunge in trading on the Tel Aviv Stock Exchange, now yielding around 13%, after a Wednesday night company report revealed undisclosed additional debt. Contrary to earlier statements, not all funds used to repay loans on Cohan's private assets were returned to the company’s coffers. The outstanding debt Cohan owes the company, initially reported at about $9.6 million, has been revised to approximately $3.8 million following repayments and adjustments in July. The company’s audit committee imposed a 15% annual interest rate on this debt due to the high risk and misuse of funds.
The investigation found that $2.5 million of a preferred equity loan of $4.7 million taken before the bond issuance was diverted to repay loans on private assets unrelated to the issuing company. Including interest and exit fees, this portion of the debt totals around $3.9 million. The audit committee also uncovered control failures, as some withdrawals occurred even after an additional authorized signatory was appointed, indicating incomplete implementation of internal controls and signature rights adjustments.
In response, Cohan Properties appointed a new CFO and internal legal advisor, restricted Cohan’s solo signing authority, and enhanced oversight mechanisms. Since the previous report earlier this month, Cohan has repaid about $6 million, totaling roughly $11.7 million returned out of $15.5 million withdrawn from the issuer’s accounts since the bond issuance. The controversy follows a prior disclosure that Cohan used nearly $9.6 million from the bond proceeds to settle private debts without proper disclosure in the prospectus, a claim previously denied by Cohan but now contradicted by the latest report.
This scandal emerged about six weeks after the collapse of Simad, another BVI company that issued bonds in Tel Aviv and quickly failed, raising concerns about governance and transparency in such offshore bond issuances.
