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The Lorenzi Story

Oct 2, 1998 1:33 PM   By Martin Rapaport
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RAPAPORT... The Lorenzi Story

Editor's Note: The Lorenzi story continues to develop. Information

in this story is based on sources believed to be reliable, but has not

been confirmed due to the sensitive and confidential nature of the

situation. Here is what we know as we go to press Thursday 10/01/98.







Lorenzi, Israel's third largest diamond exporter (1997 exports of

$177 million) is experiencing severe financial difficulties.

About two weeks ago the firm's checks were returned by Israeli

banks who have restricted credit facilities. Lorenzi, a CSO

sightholder, is active in the rough and polished markets with

extensive debt and international holdings.



Lorenzi owes Israeli banks $55 million ($23 million to Discount, $17

million to Leumi, and $15 million to Mizrachi) and an additional $29

million to the trade in Israel and Belgium. In the U.S., Lorenzi says

he owes $9 million and is owed about $25 million by the U.S. trade.

Lorenzi has a controlling interest in a Japanese public company,

Hohrin, which owes $60 to $70 million in Japan.



In talks with RDR,Yossi Lorenzi said the firm is experiencing cash

flow problems due to delayed payments by large U.S. customers and

excessive polished inventories. Lorenzi says that the company's assets

are greater than liabilities and the cash flow problems are a result

of an unwillingness by Israeli banks to provide sufficient export

financing. He says that the firm paid out about $10 million to the

trade just days before the trouble started. It is currently

negotiating with the Israeli banks on a comprehensive overall

agreement which will include settlement of all debts with the trade,

and credit facilities which will allow the firm to continue operating.


The word in Israel's diamond exchange is that Lorenzi has offered

debtors the following deal:



  • Debtors up to $200,000 -- 70 percent cash and 30 percent over 3

    years;

  • Debtors $200,000 to $350,000 -- 35 percent cash, 35 percent

    goods, 30 percent over three years;

  • Debtors over $350,000 -- 70 percent goods and 30 percent cash

    over 3 years.

A majority of trade creditors have reportedly

accepted the deal but the banks have not yet made a decision.

Hesitation by the banks is creating concern in the trade. So far

the banks have not requested a receiver for Lorenzi's assets. Israel's

central bank is reportedly concerned about the situation and is likely

to request a tightening of credit to Israel's diamond industry.

Israel's diamond industry currently owes the banks about $1.1 billion.

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Tags: Banks, Belgium, Israel, Israel Diamond Exchange, Japan, Martin Rapaport
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