Simed bonds put into immediate repayment as new hidden loans emerge

Simed Holding’s bond series was placed into immediate repayment this morning, adding to the distress of the company’s creditors. The move came after the BVI company disclosed late Wednesday that it had learned of two loans taken by its controlling shareholders, brothers David and Michael Shabsels, totaling about $33 million, or roughly NIS 100 million.

The first loan was for about $18 million from Credit Federal Visions and is secured by a lien on a hotel owned by the brothers. The second was for $15 million from Newtek and is backed by guarantees from six group companies and a pledge of shares in the camp company, whose assets are already pledged to Israeli bondholders. These previously undisclosed loans may complicate bondholders’ efforts to recover money, mainly through selling company assets.

Simed operates summer camps in the United States and raised NIS 620 million from Israeli institutional investors in December. Five months later, the company said the controlling shareholders had withdrawn about $34 million from its accounts and subsidiaries, after which it could not meet payments to bondholders. The new disclosure suggests the prospectus disclosures were incomplete and raises further criticism of the underwriters and other gatekeepers who were supposed to assess Simed’s condition and corporate structure.

Before the latest revelation, Simed’s total debt stood at $270 million, including $210 million owed to bondholders and $60 million to banks. Earlier this week, the company’s board resigned, and the Tel Aviv Stock Exchange suspended trading in the bonds entirely after they plunged 38% in a single session.