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| AMPL > SEC Filings for AMPL > Form 8-K on 4-Sep-2012 | All Recent SEC Filings |
4-Sep-2012
Triggering Events That Accelerate or Increase a Direct Financial Oblig
Direct Financial Obligations
As previously disclosed, on August 29, 2012, Ampal-American Israel Corporation (the "Company") filed a voluntary petition for relief (the "Filing") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Court"), Case No. 12-13689. Absent the protections provided by the Bankruptcy Code, the Filing could result in the termination of, or constitute an event of default under, the credit facility dated November 29, 2007 (the "Facility"), between Israel Discount Bank Ltd. ("IDB") and Merhav-Ampal-Group, Ltd. ("MAG"), an indirect wholly-owned subsidiary of the Company. The Filing could also result in the automatic and immediate acceleration of the indebtedness under the Facility.
The indebtedness under the Facility was originally divided into two equal loans of approximately $43.7 million. Interest on both loans accrues at a floating rate equal to LIBOR plus 3% and is payable on a current basis.
MAG has been informed by IDB that a sum of approximately 67,745,000 New Israeli Shekels (equivalent to approximately $16.7 Million) held by MAG in an IDB bank account was set off by IDB on August 30, 2012. IDB asserts in its notice that the set off is in accordance with a certain irrevocable written undertaking provided by MAG to IDB on December 31, 2007 (the "Undertaking"), to which the Company is a guarantor. IDB claims that the Filing constitutes a breach of the Undertaking, which would allow IDB to set off all monies held by MAG at IDB, and would also allow IDB to accelerate MAG's entire indebtedness under the Facility and to set it to immediate repayment. IDB has not set the entire debt to immediate repayment, but noted that it retains any right it may have to do so, and also reserves its rights to do so in the future.
In light of IDB's notice and actions, the Company and MAG currently are evaluating all of their options, including all of their possible legal actions.
Any efforts to enforce the Company's payment obligations are automatically stayed as a result of the Filing.
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