A: That's right."
- Second, the evidence and testimonies show that what interested the trustee, and what the creditors actually relied on, was the element of state involvement and not the accounting data. Moreover, the plaintiffs did not claim or present any evidence indicating that they actually reviewed the financial statements prior to their investment. Thus, the bond trustee admitted that the bondholders were less interested in the company's equity when they saw Agrexco as being massively supported by the state. The following is evident from the minutes of the General Meeting of the Bondholders (Series A) of the Company dated June 23, 2011 (Appendix 3 to Lopetig's affidavit, at p. 56 of the affidavit):
"Giora Loftig: In a meeting held on Tuesday, a long discussion was held, in which it was made clear to the company that the shareholders had invested in the company only because of the state's involvement in it, and that the holders had no interest in the capital. The message we received from the company was that without reaching an arrangement that includes the company days away from collapse, we were told that in the event of liquidation of the company, it is believed that the holders would not see the funds.
Meron Foam:... In addition, we would like to work with a PR firm in order to present our interests in the public discourse and in an attempt to exert pressure on the state to recognize its obligations to bondholders."
- The Midroog report, which was published before the bond issuance, also shows that:
"The government's holdings provide stability to the company" (N/2, at p. 8).
In these circumstances, it appears that the agreement of institutional entities to provide credit to the company, without collateral, was based on the company's status as a state-controlled entity that serves its needs. In addition, the Midroog report already attests in 2007 to the "problematic" relationship between Agrexco and Migdalim. A reasonable reader of the Midroog report will be able to identify that there is a business model that includes advance payments, in practice, financing, in exchange for receiving agricultural produce, in the absence of a contractual obligation on the part of the growers for continuous supply, in contrast to the management's claim of high loyalty in practice (ibid., at p. 3):