Israel’s Rada signs agreement to reduce outstanding debt to banks
Israel’s RADA Electronic Industries Ltd. has entered into a Memorandum Of Agreement (MOA) on June 22, 2003, with Howard Yeung, its controlling shareholder, Bank Hapoalim B.M., and Bank Leumi Le-Israel B.M for debt restructuring.
The banks agreed to restructure part of the approximately $5.5 million of the RADA debt. Under the terms of the memorandum the Banks agreed to extinguish $1.1 million of debt and the company agreed to: pay the Banks $1,1 million issue warrants to the Banks in lieu of an additional $1.251 million in debt, and issue to the banks five-year warrants exercisable into 1.1 million ordinary shares at an exercise price of $2.00 per share.
The warrants to be issued in lieu of the $1.251 million of debt will be exercisable at par and the number of warrants to be issued will be based on the amount of the debt divided by 50 percent of the average closing price of the Company's ordinary shares for the 90 days prior to closing.
As part of the agreement, the company's principal shareholder, Howard Yeung, agreed to grant a put option against the banks' warrants at the valuation at which the Warrants were issued. Concurrently, the banks grant Yeung a call option allowing him, during a 21 month period commencing as of the closing, to purchase the Banks' Warrants at a price not lower than $1.251 million and not higher then $1,770,165.
Following the agreement RADA's outstanding debt to the Banks will decrease from $5.5 million to $2 million. The Banks have also agreed to provide RADA with a $500,000 line of credit. This transaction will require shareholder approval under Nasdaq rules and pursuant to the Israeli Companies Law and an extraordinary meeting of shareholders has been scheduled for July 22, 2003.
"We thank Mr. Yeung and both of Israel's largest banks for their continuous trust and support of RADA. This MOA positions RADA to better cope with the technological and business challenges it is facing", stated Adar Azancot, RADA's Chief Executive Officer.
RADA Electronic Industries Ltd. is an Israel based company involved in the military and commercial aerospace industries, with 110 staff. The company specializes in Avionics, Ground Debriefing Stations (Video, ACMI and Maintenance) and Automatic Test Equipment. (menareport.com)
© 2003 Mena Report (www.menareport.com)