2001 will probably be remembered as one of the worst years in the history of Green Venture Capital, controlled by Yitzhak Tshuva. Green today released its results to the local stock exchange, showing a NIS 56 million company loss in the third quarter and NIS 102.6 million since the beginning of the year.

Keep in mind that except for Green's financing expenses, which amounted to NIS 19.5 million since the beginning of the year, most of Green's losses are due to accounting write-downs and losses by the funds it holds. Green's real loss on its holdings in public venture capital funds, on paper at any rate, is much higher than its reported loss.

Green has holdings in seven venture capital funds, six of which are public: Mofet Venture Capital Fund Management (51.3%), Marathon Venture Capital Fund (32.9%), Sadot R and D (LSE: SDT) (15.6%), Inventec (24.9%), Aura Investments (28.4%), Commutech Holdings and Investments (34%), and Samurai Web Ventures, a private fund (28.6%). In June, Green sold its holding in the ProSeed Venture Capital Fund for NIS 15.7 million, posting a NIS 1.2 million capital gain.

In the third quarter, Green wrote down its investment in Inventec by another NIS 8 million; Green's total write-down in Inventec amounts to NIS 30 million since the beginning of the year. The investment in Aura was devalued by NIS 14 million in the third quarter and the investment in Samurai by NIS 15.5 million in the same period.

Green's write-downs in venture capital investments have totaled NIS 27.9 million since the beginning of the year. Of this sum, NIS 12.9 million was written down in Sanctum (only NIS 200,000 in the third quarter). NIS 6.6 million was deducted from the investment in HemoDynamics Systems, of which NIS 3 million was in the third quarter. Green devalued its investment in VCON Communications by a minor NIS 100,000 in the third quarter, out of a total write-down of NIS 6.4 million since the beginning of the year, while the NetAccess investment was written down by NIS 2 million in the third quarter.

In any event, while Green's profit and loss statement is of limited significance, this venture capital fund's balance sheet is intriguing. As of the end of the third quarter, Green's liabilities totaled NIS 470 million, NIS 151 million of which were current liabilities. In September, Green repaid bonds worth NIS 61.9 million. The bonds were repaid from the company's own sources and from bank credit, guaranteed by a lien on a Tshuva deposit.

NIS 298 million of Green's debts are to Bank Leumi. In October, Green announced it had reached agreement with Bank Leumi to reschedule its debt over five years.

The arrangement with Bank Leumi concerns a $76 million debt, of which $26 million is in the form of a loan, to be repaid in installments, until repayment is completed in April 2007. This loan will be repaid in twice-yearly installments of $2.6 million each, starting in April 2002. The remaining $50 million in debt will be repaid in April 2007. The interest of Libor plus 1.4% will be paid in six-month installments. If Green does not meet its obligations under the new arrangement, Bank Leumi will be entitled to move the repayment date up to April 2002.

Furthermore, Green is expected to allocate rights as part of its agreement with Bank Leumi. The draft prospectus for the rights allocation is due to be approved by the Securities Authority in the coming days. Green is scheduled to raise NIS 60 million from its rights issue. In the past ten days, the Green share shot up 115% to NIS 6, reflecting an $11 million market value.

The surge in the company share will undoubtedly aid the company in carrying out its rights issue. At the same time, it is still unclear who made the recent purchases of Green shares. The purchaser should probably take into account the fact that judging by Green's current market value and the planned rights issue agreement, he will have to pay NIS 1.5 for every shekel he paid for the shares on the stock exchange in order to preserve his holdings in Green.

One way or another, Green Chairman and CEO Joshua Maor explains Green's third quarter write-downs by a change in the company's market assessment: "Our assessment changed during the third quarter. We are confident the market will recover; the question is when. We now believe the recovery will occur several quarters later than we had previously thought. That is why we devalued our investments in start-ups, the public companies, and in Samurai.