Lorenzi Diamonds Faces $100 Million Debt

Ramat Gan, Israel-The international diamond industry is abuzz over news that Lorenzi Diamonds, Israel's second largest diamond exporter by value, reportedly owes at least $100 million in outstanding debts to its banks and trade creditors.

Lorenzi, which exported almost $177 million in polished diamonds in 1997, started missing payments in late September due to serious cash flow problems, according to industry sources. The firm owes about $60 million to three Israeli banks-Bank Leumi, Israel Discount Bank and United Mizrahi Bank-and $30 million to local and foreign diamantaires, sources said.

As of press time, the Israel Diamond Exchange was working on a bailout plan for the cash-strapped exporter, according to the Jerusalem Post. The tentative agreement calls for Lorenzi to immediately pay part of its debt-perhaps in the mix of cash and polished goods-while making the remaining payments for a period up to three years.

As of press time, Lorenzi is currently negotiating with the Israeli banks to reach an overall agreement that would settle all the company's debts, while still allowing the firm to continue operations, sources said.

Details of the bailout plan, however, have not been finalized.

The Israel Diamond Exchange, meanwhile, has entered negotiations to help prevent the complete collapse of Lorenzi, industry sources said. Exchange management fears that if Lorenzi closes, it will have a domino effect on the struggling Israeli diamond industry.

A source close to Lorenzi, however, said that the company's total assets exceed its debt. Lorenzi's cash flow problems are attributed to slow payments from overseas customers, namely from the United States, the source said.

There has been no announcement yet as to the future of the company's New York operations, which were incorporated Aug. 4, 1997. Sam Offir, president of Lorenzi's New York office, has been unavailable for comment.

Lorenzi Diamonds, a De Beers sightholder, was ranked as Israel's third largest polished diamond exporter in 1997. The firm then expanded to become the country's second largest exporter in 1998.