Distressed Funds Set to Profit Millions as Simad Summer Camps Assets Sell Above Book Value
More than two months after the alleged embezzlement scandal involving Simad summer camps' bond investors in Tel Aviv, the company announced it has completed a valuation process for selling assets pledged to Israeli bondholders. The assets, mainly summer camps, were offered at about a 7% premium over their book value, with expected proceeds of $321 million compared to a book value of $282 million. Including private sales of two camps, the total expected proceeds reach approximately $345 million, a 13.5% premium over the $304 million book value of the pledged assets.
This anticipated sale brings relief to institutional investors who had feared losing their investments after the company's rapid collapse and problematic management by the Shabazlas brothers. Full repayment of the bonds issued in December last year now appears likely, including accrued interest for delayed payments. Among the notable investors, the investment house Meor holds over a quarter of the bond issuance, with investments totaling about 190 million shekels.
Interestingly, distressed investment funds like ClearMark and Brosh acquired significant portions of Simad bonds after their value plummeted by over 50% following the scandal's outbreak in late May. These funds are positioned to gain substantial returns if the asset sales and bond repayments are completed as planned. ClearMark also extended a $42 million loan to Simad at an 11% annual interest rate to support ongoing camp operations during the sale process.
The finalization of the asset sales depends on court approval in New Jersey expected by August 10, with deal closures anticipated in September. Simad noted multiple offers were received for most assets, allowing alternatives if initial deals fall through. A major bondholder expressed confidence that investors will recover their full principal, highlighting the unusually strong asset backing for a BVI company.
Separately, the local corporate debt market saw resistance led by Meor against dividend distributions and financial interpretations at Partner Communications and Nofar Energy, reflecting ongoing tensions between bondholders and company management in Israel's financial sector.
