All Year clears William Vale bond hurdle on second try

New proposal increases prepayment penalty by 1 percentage point

Jan.January 30, 2020 05:00 PM
The Tel Aviv Stock Exchange bull and the William Vale

The Tel Aviv Stock Exchange bull and the William Vale

Sometimes, 1 percent can make all the difference.

A month after narrowly failing to get bondholder approval to amend prepayment terms on Israeli bonds backed by the William Vale complex in Williamsburg, Yoel Goldman’s All Year Management has succeeded on its second try.

The key was doubling the prepayment penalty to 2 percent.

The bonds in question were issued by All Year in 2017 for a $166 million refinancing of the then recently completed William Vale complex at 55 Wythe Avenue.

Now that the developer is seeking to address cash flow concerns by selling or refinancing the property, the bonds will be paid off well before maturity, and the amount All Year should pay has become a bone of contention between the firm and its bondholders.

The developer’s Series C bondholders approved the changes in a vote Thursday with 76 percent of votes in favor, according to documents filed with the Tel Aviv Stock Exchange. The prior proposal had received 63 percent support, just short of the two-thirds supermajority needed.

Representatives for All Year did not respond to a request for comment.

Institutional investors who were persuaded by the percentage-point increase include boutique investment house Yelin Lapidot and the pension fund for employees of the Israel Electric Corporation, a comparison of vote rolls shows.

Goldman’s firm disclosed in December that it was considering selling or refinancing the William Vale complex, as well as Denizen Bushwick rental development on the site of the former Rheingold Brewery. The properties serve as collateral for All Year’s Series C and E bonds, respectively.

The announcement came soon after All Year disclosed a $41 million loss in the third quarter, which led the firm’s bond prices to tumble. Analysts in Israel have repeatedly raised questions about the developer’s debt load and cash flows, and the firm played a major role in the broader market panic of late 2018 and early 2019.

Prior to the newly approved amendment, the amount All Year would have to pay in the event of prepayment was determined by a complex formula involving future cash flows and the returns of government bonds.

On the same day that bondholders rejected All Year’s first attempt to amend the bond terms, Israeli rating agency Midroog downgraded the outlook for the firm’s two secured bond series — and the firm as a whole — to negative, citing cash flow and leverage as concerns.

While the latest vote may pave the way for All Year to proceed with its plans for the William Vale, the fate of Denizen Bushwick appears less clear. Similar changes to the bond terms for the company’s Series E bonds, backed by the Bushwick property, were rejected by a much wider margin, with only 1 percent of votes cast in favor of the change.

All Year’s secured bonds are now at their highest prices in years, with the Series C bonds trading above 98 cents on the dollar, and the Series E bonds at more than 95. The unsecured Series B and D bonds continue to hover around 80 and 70 cents on the dollar, respectively.

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