Leviev to Sell Diamond Jewelry Company to Help Repay Bank Debt

Leviev said selling the Moscow Jewelry Factory will raise of $200 million

Lev Leviev will be selling the Moscow Jewelry Factory to repay Israeli banks, according to local press reports. Leviev, whose conglomerate Africa Israel received a “Going Concern” warning after it failed to pay bondholders, is awaiting court approval of his settlement with them.

During a Wednesday court hearing, details of Leviev’s agreement with the banks revealed that his privately held company Memorand will sell the Moscow Jewelry Factory to repay some of Africa Israel’s debt.

The company could command a price of $200 million, the agreement says.

The Moscow Jewelry Factory polishes diamonds and offers loose diamonds as well as jewelry to consumers. According to documents on its website, the firm is part of the Ruiz Group of Companies and the Leviev Group.

Seventy percent of what Leviev gets from selling the diamond company will immediately go to four Israeli banks - Leumi, Mizrahi-Tefahot, Discount and Beinleumi, according to a report in the Israeli daily Ha’aretz.

Africa Israel failed to pay NIS 557 million ($147.37 million) to bondholders in November. It recorded a NIS 348 million ($92 million) loss in its third quarter. In late October, the diamond tycoon agreed to infuse $200 million into Africa-Israel.

Leviev’s current 75 percent holding in Africa Israel will be diluted to 47.24 percent, which will then rise up to 52.8 percent as he puts up the money for new shares.

Many wondered how the heavily leveraged Leviev will pay the debts and his $200 million commitment. In April, Africa Israel started selling assets to ensure that it has the cash to pay bonds. In August, Leviev said the company had sold assets worth more than $1.04 billion and that he had personally put up over $262 million.

Leviev is also giving the banks more collateral to back Memorand's loans, including a top-tier lien on his holdings in the gold companies Lukas Zolotoy and Zolotoy Kolosek.

Memorand owes the four banks more than $262 million, more than half of which is owed to Bank Leumi.