MIRA INFORM REPORT

 

 

Report Date :

29.12.2008

 

IDENTIFICATION DETAILS

 

Name :

LEO SCHACHTER DIAMONDS LTD.

 

 

Registered Office :

54 Bezalel Street, Diamond Exchange, Yahalom Building, Ramat GAN 52521

 

 

Country :

Israel

 

 

Date of Incorporation :

13.07.1981

 

 

Legal Form :

Private Limited Company

 

 

Line of Business :

Traders, Importers, Marketers and Exporters. of Diamond Cutters, Polishers,

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Good

 

 

Payment Behaviour :

No Complaints

 

 

Litigation :

Clear

 

name & address

 

LEO SCHACHTER DIAMONDS LTD.

Telephone 972 3 576 62 22

Fax         972 3 613 24 89

54 Bezalel Street

Diamond Exchange, Yahalom Building

RAMAT GAN 52521 ISRAEL

 

 

HISTORY

 

A private limited company, incorporated as per file No. 51-089213-6 on the 13.07.1981, continuing a non-registered business founded many years earlier.

 

Subject was founded by the Late Leo Schachter and David Namdar. It was originally registered under the name SCHACHTER & NAMDAR POLISHING WORKS LTD., which changed to LEO SCHACHTER LTD. on the 30.8.2005 and finally changed to the present name on the 24.7.2006.

 

During 2004 subject's shareholders decided to split their activities, and part of the activities were transferred to a newly established subsidiary MOSHE NAMDAR & CO. LTD., which later in 2007 separated from subject's Group altogether.

 

 

SHARE CAPITAL

 

Authorized share capital NIS 1,000.00, divided into –

                1,000,000 ordinary shares of NIS 0.001 each,

of which shares amounting to NIS 75.798 were issued.

 

 

SHAREHOLDERS

 

1.    LEO SHACHTER & CO. INC., of the USA, 49.5%, owned by the heirs of Leo Schachter, the Tenenbaum and Greenberg families,

2.    MAGINIFORD JEWELERY, 41.17%, a foreign company,

3.    Lenard Kramer, 5.5%,

4.    Moshe Namdar, 3.83%.

 

 

DIRECTORS

 

1.    Eliot Tenenbaum, President,

2.    David Greenberg,

3.    Dov Tenenbaum,

4.    Marc Tenenbaum,

5.    Jonathan Austin.

 

GENERAL MANAGER

 

Yair Friedman

                   

 

BUSINESS

 

Diamond cutters, polishers, traders, importers, marketers and exporters.

 

Almost all sales are for export.

 

Among local clients: B. BRIZA COLORS.

 

Operating from owned premises in Yahalom Building, Diamond Exchange, Floor No. 22, 54 Bezalel Street (also known as 21 Tuval Street), Ramat Gan.

Also operating from several plants and offices in South Africa, Botswana, Antwerp, Geneve, New York, Toronto, China, Hong Kong, Bangkok and Dubai.

 

Having over 100 employees in Israel and several hundreds abroad.

 

 

MEANS

 

Financial data not forthcoming, but known to be financially solid.

 

Subject owns a Sight from DE BEERS. According to reports from February 2004, they are the largest receiver from a DE BEERS Sight in volume of US$ 150-200 million per year.

 

There are 9 charges for unlimited amounts registered on the company's assets, in favor of Bank Leumi LeIsrael Ltd., Israel Discount Bank Ltd. and The First International Bank of Israel Ltd.

 

 

ANNUAL SALES

 

SCHACHTER & NAMDAR POLISHING WORKS LTD. sales were:
2003 sales for export (net) reported to be US$ 417,000,000.

2004 sales for export (net) reported to be US$ 434,000,000.

 

Subject's 2005 sales for export (net) were US$ 418,000,000.

Subject's 2006 sales for export (net) were US$ 460,000,000.

Subject's 2007 sales for export (net) were US$ 446,000,000.

 

 

OTHER COMPANIES

 

LEO SCHACHTER DIAMONDS LLC, USA.

SHACHTER AND NAMDAR HOLDINGS LTD., a holding company.

 

 

BANKERS

 

Known to all local bankers.

Working also with:

First International Bank of Israel Ltd., Diamond Exchange Branch (No. 026), Ramat Gan.

 

 

CHARACTER AND REPUTATION

 

Nothing unfavorable learned.

 

Subject’s officials refused to disclose any details, as a matter of policy.

 

According to the report published by the Israel Supervisor on Diamonds in the Ministry of Industry and Trade, subject was ranked 2nd in the 2007 list of Israel's largest polished diamonds exporters, same ranking as in 2006 and 2005. Subject is only 2nd to L.L.D. DIAMONDS LTD. (US$ 550 million) and by far larger than the 3rd MOSHE NAMDAR & CO. LTD. (circa US$ 200 million).

 

Subject enjoys excellent reputation in Israel and world wide.

 

In 1995 it was reported that subject’s shareholders acquired 2 floors (21st and 22nd floors- total of 2,300 sq. meters) in the Yahalom Building, in consideration of US$ 10 million. Part of the area was rented, the rest used by subject.

 

In July 2003, it was reported that subject will own 49% in a new diamond processing plant in Canada.

 

In February 2004, it was reported that subject will establish a partnership with WILLIAM GOLDBERG DIAMONDS of the USA.

 

In May 2005, it was reported that the SCHACHTER & NAMDAR Group acquired a 3,000 sq. meters plot in central Tel Aviv, for a sum of US$ 15 million. The plot is designed for 18 story building, for residential and commercial purposes.

 

In February 2004 subject announced a structural change in the SCHACHTER & NAMDAR Group, initially the establishment of a subsidiary MOSHE NAMDAR & CO. LTD., that, in order to maximize potential where each party will focus on different markets. In the beginning of 2007 the split was completed between the activities of the Namdar Brothers, Moshe Namdar and Abraham Namdar and the LEO ASCHACHTAR Group.

 

It was also reported that subject is operating to strengthen its global activities in addressing the fast emerging Chinese market, and by strengthening the "Leo" diamonds brand in the American, British and Italian markets.

 

In March 2007 it was reported that subject is suing NIS 10 million from local contractor David Appel, claiming he failed to return on time a loan given to him in 2001.

 

Local diamond companies are facing a depression in business in general in recent months due to the recession in the U.S. markets. The American market has been the No. 1 export market and the crisis in the U.S. market affects directly many Israeli diamond companies, as purchasing has gone down dramatically. There are reports on delays in payments from clients, causing a cash flow problem to some companies.

 

In the first half of 2008, there was an increase trend in all money parameters of import and export: export of cut diamonds (net) from Israel rose by 6% comparing to parallel period in 2007, reaching US$ 3.8 billion (though carat value fell by 17%). Export of rough diamonds (net) from Israel also increased by 26% to US$ 2.19 billion (2.5% fall in carat value).

 

Import of rough diamonds (net) rose 15% in the first half of 2008 (from 2007) to US$ 2.77 billion (though carat value fell by 11%), while import of cut diamonds (net) also increased in 2008 by 19.5% reaching US$ 2.35 billion (carat value rose by 2.3%).

 

Year 2007 marked a record in the export of cut diamonds from Israel, with net sales for export of US$ 7.076 billion, 7% rise from 2006 (US$ 6.611 billion). Total export of cut and rough diamonds crossed for the first time the US$ 12 billion line. Exports (net) of rough diamonds were US$ 3.386 billion, a 25.5% increase from 2006 (US$ 2.701 billion, which was a 23.2% decrease from 2005).

Import of rough diamonds (net) rose 8% in 2007 by (from 2006) to
US$ 5.084 billion, while import of cut diamonds (net) also increased in 2007 by 13.3% reaching US$ 4.558 billion.

 

The USA is the main market for Israel’s export of cut diamonds, although its portion has been decreasing in view of the economic situation – the export rate is circa 41%, comparing to 60%-65% in past years. The secondary markets are Hong Kong, Switzerland, Belgium, U.K, and India.

 

 

Year 2007 marked a record in the export of cut diamonds from Israel, with net sales for export of US$ 7.076 billion, 7% rise from 2006 (US$ 6.611 billion). Total export of cut and rough diamonds crossed for the first time the US$ 12 billion line. Exports (net) of rough diamonds were US$ 3.386 billion, a 25.5% increase from 2006 (US$ 2.701 billion, which was a 23.2% decrease from 2005).

Import of rough diamonds (net) rose 8% in 2007 by (from 2006) to
US$ 5.084 billion, while import of cut diamonds (net) also increased in 2007 by 13.3% reaching US$ 4.558 billion.

 

The USA is the main market for Israel’s export of cut diamonds, although its portion has been decreasing in view of the economic situation – the export rate is circa 41%, comparing to 60%-65% in past years. The secondary markets are Switzerland, Belgium, U.K, Hong Kong and India.

 

 

SUMMARY

 

Notwithstanding the refusal to disclose financial details, considered good for trade engagements.

 

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.48.76

UK Pound

1

Rs.71.68

Euro

1

Rs.69.17

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

NR

In view of the lack of information, we have no basis upon which to recommend credit dealings

No Rating

 

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                 Payment record (10%)

Credit history (10%)                    Market trend (10%)                                Operational size (10%)

 

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions