Kardan NV (KARD)’s shares headed for the biggest drop this year and yields soared as stake-sale talks between the real estate investment company’s Chinese unit and an international fund ended.
The shares tumbled 4.2 percent, the most on a closing basis since Dec. 23., to 3.78 shekels at 1:53 p.m. in Tel Aviv. The yield on Kardan’s 1.19 billion shekels ($323 million) of 4.45 percent bonds maturing February 2016 soared 378 basis points, or 3.78 percentage points, to 22.41 percent, the highest level since Sept. 10. The TA-25 benchmark stock index was little changed.
Negotiations between Kardan Land China and an unidentified international fund to sell a 50 percent stake in the mixed-use project Europark Dalian ended, the company said in a statement today. Kardan, which owes debt holders 35 million euros ($46 million) this year and 74 million euros in 2014, had 50 million euros in its coffers at the end of September, according to a company presentation in November.
“The deal would have given Kardan a net cash flow of tens of millions of dollars, which the company needs to pay debt at the beginning of 2014,” said Noam Pincu, an analyst at Psagot Investment House Ltd. “Kardan has a liquidity problem and the deal would have given it breathing space.”
Standard and Poor’s Maalot lowered the Kardan’s credit rating to ilCC from ilBBB in July saying the liquidity profile of the company would deteriorate as a result of a debentures buy-back plan announced. Kardan in January reached an understanding with bondholders on concessions including its dividend distribution and that 50 percent of asset-sale proceeds will be used for debt repayments.
Kardan Land China is now resuming discussions with other funds and investors, the company said today. The company said on Feb. 20 talks were for the sale of a 50 percent stake in the Europark Dalian mall for 710 million yuan ($114 million).
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