I am also of the opinion that the terms of the loan show that the possibility of a breach by the borrower was taken into account by the company as a risk whose feasibility is real. The high interest rate set for the loan indicates that this is a borrower who could not receive a loan under the usual conditions in the banking system. The nature, quality and value of the collateral indicate that the company took care of the source of full repayment of the loan, which does not depend on the repayment by the borrower nor on its financial strength.
- Moreover, in the immediate report published by the company on the first withdrawal from the DAKMA loan fund for the purpose of granting the specific loan, the company detailed the strict terms of the specific loan from the perspective of the borrower. The company elaborated on the interest, the collateral demanded and the agreed compensation for the breach (report dated April 29, 2018, Appendix 27 to Lorenzi's response):
"The specific loan is in the total amount of ILS 10 million, at an annual interest rate of about 15% (including loan provisions), for a period of 12 months, all in accordance with the conditions set out in the company's credit policy as approved by the company's board of directors (for more information, see the company's report dated April 12, 2018...).
For the purpose of securing the specific loan, DKMA will be provided with unlimited first-degree mortgages in the amount of three income-producing real estate properties located in Gush Dan, with a market value (by an external valuer) of approximately ILS 23 million and a market value for collateral purposes (including a reduction of between 15%-20% due to rapid realization) of approximately ILS 16 million, which constitute a collateral ratio to the loan of approximately 43.6% and approximately 62%. Respectively.
In addition, the specific loan includes acceptable grounds for which the DMA will have the right to immediate repayment of the specific loan, agreed compensation of ILS 1 million in the event of a breach of the terms of the specific loan by the borrower that was not corrected on time, as well as arrears interest if the conditions set out in the specific loan agreement are met...".