Nof Zion faces upheaval after bank rejects debt repayment

If Digal Company does not come up with additional funds in coming days it may be forced to accept offer of Palestinian businessman to buy e. J'lem housing complex.

nof zion 311 (photo credit: MELANIE LIDMAN)
nof zion 311
(photo credit: MELANIE LIDMAN)
Once again, the economically struggling Nof Zion housing complex in east Jerusalem may be purchased by Palestinian- American businessman Bashar al-Masri, who wants to change the ideologically-driven Jewish apartments into a development for Arab families.
Residents of Nof Zion, in the east Jerusalem neighborhood of Jebl Mukaber, thought that their fight to prevent Masri from buying the remainder of the housing complex’s land was over in mid-January, when supermarket mogul Rami Levy made a surprise offer to buy the contested land.

The future of Nof Zion, the main project of the struggling Digal Company, came under fire after Masri, the businessman behind the planned Palestinian city of Rawabi, put forth the highest offer to rescue the company from its NIS 100 million debt. The company owes most of the debt, some NIS 80m., to Bank Leumi.
However, Bank Leumi informed Digal on Sunday that its debt repayment plan, using money from the Levy deal, would not be sufficient. The company has until Wednesday to come up with additional funds, or it may be forced to accept the highest offer – Masri’s.
Also on Sunday, Masri reportedly offered to buy Digal owner Meir Shamir’s stake in the company.
Shamir holds 35 percent of the company’s bonds.
The spokesman for Bank Leumi, Aviram Cohen, declined to discuss details of the case, citing client privacy.
“We were expecting that there was a nice offer and that Bank Leumi was going to somehow make this work, but at the last minute Bank Leumi said we’re back to stage one and maybe worse,” said Nof Zion resident Shai Cooperman, who has lived in the neighborhood for a year and a half. Like dozens of other residents, Cooperman bought a small number of bonds in Digal in order to attend the bondholders’ meetings.
“It really gave us a surprise, we thought it was fine and almost sold,” he told The Jerusalem Post on Monday. “We were thinking that Bank Leumi really wants this also to happen [not to sell to Masri], but maybe we’re mistaken.”
The national religious community is planning protests on Tuesday at a number of Bank Leumi branches in Jerusalem, as well as at the company’s offices in Tel Aviv.
“Bank Leumi is a national bank for Israel, not for Palestine,” said right-wing activist Aryeh King, head of the Israel Land Fund, which is providing assistance to the Nof Zion residents.
“They’re choosing to stand with a former terrorist instead of with the nation of Israel.
We’re just asking the bank to behave like it should,” he told the Post. King threatened that “tens of millions” of shekels would be withdrawn from the banks if the complex were sold to Masri.
A statement signed by rabbis – including Safed Chief Rabbi Shmuel Eliahu, Kiryat Arba’s Rabbi Dov Lior, Beit El’s Rabbi Zalman Melamed, Rabbi Elyakim Levanon of the Elon Moreh yeshiva, and Rabbi Yehoshua Shapira of the Ramat Gan hesder yeshiva – also appeals to the bank management to take the Jewish proposal and not that of Masri, “who is not hiding his intention to establish an Arab stronghold in Jerusalem’s Nof Zion.”
The letter was initially sent to the bank over a month ago, after Masri’s identity was revealed. On Monday, the letter was made public.
In January, company bondholders voted to accept a bid from Levy and his Australian Jewish partner, Kevin Bermeister, the inventor of Kazaa music downloads, even though the bid was significantly lower than Masri’s.
The bondholders had originally accepted an offer from a client represented by attorney Dov Weisglass, who served as former prime minister Ariel Sharon’s bureau chief, to buy the debt. It was later revealed that Weisglass was representing Masri. The move to sell the debt to Masri outraged those residents who had already moved into the first 91 apartments, which were completed in 2008.
The complex is eventually meant to contain close to 400 apartments, plus a shopping center, nurseries, synagogues and hotels. The development was marketed to the nationalreligious community as luxury apartments.

Jonah Mandel contributed to this report.