Reading time ( words)
Eltek Ltd. has obtained a loan of NIS 2 million (approximately US$530,000) from Nistec Golan, the Company's controlling shareholder, in order to decrease Eltek's debt to one of its banks.
The loan agreement between the Company and Nistec was approved by the Company's Audit Committee and Board of Directors. The principal terms of the loan are:
- The loan will bear interest of Prime+ 1.35%. Since Nistec obtained a loan from a commercial bank for a repayment on behalf of Eltek, should Eltek fail to repay the loan and accrued interest on the due date, the interest shall be increased to the interest determined by the bank with respect to the underlying loan received by Nistec.
- The loan will be repaid by April 30, 2019. However, Eltek has the option to extend the term of the loan until March 31, 2020 in the event that its Audit Committee determines that such extension is required for the Company's orderly operations.
- In the event of an equity investment in the Company, Nistec may demand immediate repayment of the loan, provided that such repayment will be used only for a conversion of the loan into the Company's ordinary shares.
- Nistec may demand immediate repayment of the loan upon the occurrence of certain customary events of default or in the event of a change of control.
- The loan (or any part thereof) may be repaid at any time at the Company's discretion.
In addition, the Audit Committee and Board of Directors have approved Nistec's guarantee of Eltek's NIS 2.0 Million (approximately US$530,000) existing debt to the same bank, which debt to such bank will be repaid by Eltek by April 30, 2019. Consequently, this guarantee will expire on April 30, 2019. Eltek may request that Nistec pay its debt to the bank, and in such event, the guarantee will convert into a loan to Eltek, which will be repaid by March 31, 2020. The terms of the loan will be back-to-back with the terms of the loan taken by Nistec for such payment, or with "Risk-free" Israeli government bonds interest, or with no interest, at Nistec's discretion. The terms of the loan agreement will be the same as the terms of the loan agreement described above, with required amendments.