MIRA
INFORM REPORT
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Report Date : |
01.02.2008 |
IDENTIFICATION
DETAILS
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Name : |
ENERCO ENTERPRISES LTD. |
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Formerly Known As : |
KATZENSTEIN ADLER & CO. INDUSTRIES (1975) LTD |
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Registered Office : |
P.O. Box 1176 17 Haneviim Street, Industrial Zone, Ramat Hasharon
47279 |
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Country : |
Israel |
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Financials (as on) : |
30.09.2007 |
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Date of Incorporation : |
1949 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Designers, Manufacturers, Exporters and Marketers of Electrical
Infrastructure Products |
RATING &
COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
name
& address of the company
ENERCO ENTERPRISES
LTD.
Telephone 972 3 548 48 48
Fax 972 3 540 80 01
P.O. Box 1176
17 Haneviim Street,
Industrial Zone
RAMAT HASHARON 47279 ISRAEL
HISTORY
Originally
established in 1949 as a non-registered business.
Converted into a private limited company and registered as such as per
file No. 51-071562-1 on the 2.7.1975, under the name KATZENSTEIN ADLER &
CO. INDUSTRIES (1975) LTD., which changed to KATZENSTEIN ADLER INDUSTRIES
(1975) LTD. on the 18.1.1979
Converted into a
public limited liability company and registered as such as per file No.
52-003354-9 on the 22.9.1982.
On the 30.9.1982
published a prospectus offering shares to the public. In 1989 company was taken
over by ELCO LTD (presently ELCO HOLDINGS LTD.).
On the 14.11.1991,
following the acquisition by ELECO Group (in 1989), name changed to ELCO
INDUSTRIES (1975) LTD., which changed to ELCO INDUSTRIES LTD. on the 13.1.1994,
and finally changed to the present name on 3.5.2004.
On 11.1.2005,
following a successful tender offer, ELCO HOLDINGS LTD. reached full ownership
in subject.
Following that,
subject’s shares were de listed from the Tel Aviv Stock Exchange and subject
became a private limited company (same latter registration number).
SHARE CAPITAL
Authorized share capital
NIS 14,000,000.00, divided into - 14,000,000 ordinary shares of NIS 1.00 each,
of which shares amounting to NIS 7,376,321.00 were issued.
SHAREHOLDERS
Subject is fully
owned by ELCO CONTRACTING AND SERVICES (1973) LTD., a fully owned subsidiary of
ELECTRA LTD., a public limited liability company whose shares are traded on the
Tel Aviv Stock Exchange, controlled (69%) by ELCO HOLDINGS LTD., also a public limited
liability company whose shares are traded on the Tel Aviv Stock Exchange,
controlled (70%) by Gershon Selkind.
In May 2006, the deal in which
ELCO HOLDINGS LTD. sold 100% of subject to its subsidiary ELECTRA
LTD LTD. was completed. In consideration of the shares, ELCO HOLDINGS was
allocated shares in ELECTRA in value of NIS 95 million as
subject's company value, price based on the current market values.
DIRECTORS
1. Michael Selkind, Co-General Manager of ELCO
HOLDINGS,
2. Itamar Deutscher, General Manager
of ELECTRA,
3. Itzhak Nissim, CFO of ELECTRA,
4. Arie Haim.
GENERAL MANAGER
Eli Rothstein.
BUSINESS
An
electro-mechanical company. Directly and through its subsidiaries, are
designers, manufacturers, exporters and marketers of electrical infrastructure
products for high, medium and
low-voltage applications (transformers, power supplies, mobile sub-stations,
electrical boards, installations, etc).
Subject provides all allied services for the
products: planning, installation, maintenance, etc.
70% of sales are
for export, mainly to the USA.
Also (through
subsidiary) operate as agents, importers and marketers of electrical products
and components (light bulbs, switching
equipment, etc.).
Subject, and via
subsidiary KATZENSTEIN ADLER & CO. LTD. are sole local agents of (main
agencies):
MOLLER, ABB,
NIEDAX, all of Germany,
AREVA, of France
ORMAZABAL, of
Spain,
BARDUCT, of the
UK,
PHILIPS LIGHTING,
of the Netherlands.
Amongst clients:
local municipalities, government institutions, INTEL ISRAEL, THE ISRAEL
ELECTRIC CORP., ISRAEL CHEMICALS, Ministry of Defense, ELANAC (Germany),
CON-EDISON (USA) and many more.
Operating from a
plant in 17 Haneviim Street, Industrial Zone, Ramat Hasharon and from a
facility and offices in 2 Hasadna Street, Industrial Zone, Ra'anana.
The ENERCO Group also
operates from branches and facilities in the Barkan Industrial Zone, Jerusalem,
Beer Sheva and Haifa.
Having over 400
employees in the ENERCO Group and over 12,000 employees in the whole ELCO
Group.
MEANS
Financial data is included (since April 2006) in the consolidated B/S of
parent company, ELECTRA LTD., which shows:
NIS
(thousands)
31.12.2006 30.09.2007
ASSETS
Current Assets
Cash and cash equivalents 408,832 566,065
Short term investments and loans 203,404 477,192
Customers 437,074 537,145
Other debtors 68,456 136,369
Income receivable from work
orders 162,042 182,352
Stock and real estate inventory 278,854 311,480
Yielding property for realization ________- __191,375
1,558,662 2,401,978
Investments and long term receivables 1,265,263 1,675,280
Yielding properties (Israel and abroad) 3,918,895 9,478,211
6,742,820 13,555,469
======== =========
LIABILITIES
Current liabilities 1,431,072 2,164,047
Long term loans for yielding properties 2,450,672 7,726,917
Long term liabilities 1,190,433 1,787,236
Equity
Minority interests 337,389 471,673
Shareholder's equity 1,333,254 _1,405,596
6,742,820 13,555,469
======== =========
ELECTRA current market value US$ 460.6 million.
Subject's
consolidated B/S to the 31.12.2004 totaled NIS 276,463,000 (equity was NIS
174,285,000).
There are 3
charges for unlimited amounts registered on the company's assets (financial and
fixed assets), in favor of Bank Leumi LeIsrael Ltd., Israel discount Bank Ltd. and
The First International Bank of Israel Ltd.
ANNUAL SALES
Consolidated
Statement of Income
Year
ended 31.12
NIS
(thousands)
2002 2003 2004
Revenues 322,946 312,323 307,219
Gross profit 58,691 59,796 51,805
Operating income 1,249 9,545 7,524
Pre-tax income (loss) (9,405) 15,567 6,431
Net income (loss) (10,973) 10,273 5,965
======= ====== =======
Subject
2005 revenues were around NIS 300,000,000, making with a net profit of NIS 2,186,000.
Subject's parent ELCO CONTRACTING AND
SERVICES (1973) LTD. ended 2006 with a net profit of NIS 21,022,000.
ELECTRA LTD. revenues from works execution,
services and properties leasing:
Consolidated 2005 revenues were NIS
1,817,405,000, making a gross profit of NIS 283,144,000, an operating income of
NIS 209,511,000 and a net income of NIS 139,945,000.
Consolidated 2006 revenues were NIS
2,181,314,000, making a gross profit of NIS 283,144,000, and a net income of
NIS 350,514,000.
Consolidated
first 9 months of 2007 revenues were NIS 2,290,300,000 (43% increase compared
to the parallel period in 2006), making a gross profit of NIS 538,786,000, and
a net income of NIS 103,288,000.
The 3 quarters
significant increase in revenues emanates from the inclusion of ETCO NIGERIA
since 1.5.2007 (see below regarding the acquisition), the large increase in the
Group's real estate activities, as well as from subject's activities.
OTHER
COMPANIES
Subject's
subsidiaries (100%):
KATZENSTEIN ADLER
& CO. LTD., dealing as:
1. Agents, importers and
marketers of electrical products and components.
2. Designers,
manufacturers and marketers of products in the electricity and
electro-mechanics fields, e.g. electrical
boards and installations.
K.A. ELECTRICAL
EQUIPMENT LTD.
ELCO CONTRACTING AND SERVICES (1973) LTD.,
subject's parent
ELECTRA LTD., perform electro-mechanical projects and provide services for building
facilities and infrastructure. The ELECTRA Group is operating as contractors,
installers, marketers, exporters and service providers for air-conditioning
systems, elevators and escalators, sanitation systems, electricity systems and
electrical equipment, finishing construction works, lighting elements, etc.
Among ELECTRA subsidiaries (all wholly owned subsidiaries unless otherwise
stated):
KARIV - BUILDING SYSTEMS (TEL AVIV) LTD.,
industrials installations
ELECTRA REAL ESTATES LTD., 75%, a real estate
company. Investors in yielding real estate and real estate projects in Israel
and abroad. A public limited company, whose shares traded on the
Tel Aviv Stock Exchange, current market value US$ 479.3 million.
ELECTRA FINANCE & INVESTMENTS LTD.
KADAR AIR-CONDITIONING SYSTEMS (1989) LTD.
ELECTRA INVESTMENTS (1998) LTD.
ELECTECH HOLDINGS B.V., Netherlands.
ARIEL PROPERTIES LTD., real estate
management company.
ELECTRA PLASTICS LTD., 50%
TAL ELEVATORS (TEL AVIV) LTD.
ELECTRA METALS & ENGINEERING (T.A) LTD.
G.S.K.O. MARKETING CO. LTD.
A. HERTZ AIR CONDITIONING & COOLING
ENGINEERING LTD.
STEINITZ LIGHTING ENGINEERING 1996 LTD.
ELECBEL N.V., Belgium, 90%
ELECTRA CONSTRUCTION LTD.,
DEVIS ENERGIEEN NV, electro-mechanical projects
in Belgium and Germany, one of the largest companies in Belgium involved with
planning and installing air conditioning, piping and infrastructure systems.
ETCO NIGERIA LTD.,
Nigeria.
ELECTRA is
controlled by ELCO HOLDINGS LTD., also public limited liability companies whose
shares are traded on the Tel Aviv Stock Exchange (current market value 390.7
million), and is controlled by Gershon Selkind. It also controls the under
mentioned companies:
AMZ ELECTRICAL
PRODUCTS MARKETING LTD., 100%, importers, operators of large domestic
appliances retail chain.
ELCO MARKETING
CHAINS LTD., 100%
ELECTRA CONSUMER PRODUCTS LTD., 78%, manufacturers,
marketers and exporters of air-conditioners for residential use (89% of
turnover) and central system units, gas ovens, solar collectors, and equipment
for elevators.
And many more.
BANKERS
Bank Leumi
LeIsrael Ltd., Central Branch (No. 800), Tel Aviv.
Bank Hapoalim Ltd., Central Branch
(No. 600), Tel Aviv.
Israel Discount Bank Ltd., Main Branch (No.
010), Tel Aviv.
CHARACTER AND REPUTATION
Nothing
unfavorable learned.
Despite our strenuous efforts, we were
unable to speak with subject's officials as they were always too busy.
Subject is the only
local manufacturer of large transformers for power plants in Israel, with
installed base of 95%, and big rectifiers for the chemical industry.
Subject and the
ELECTRA/ ELCO Groups are Israel’s largest group in the electro-mechanical field
and a leading manufacturer and marketer of air-conditioning systems in Israel.
The ELECTRA Group
is also one of Israel's largest companies dealing in real estate, mainly real
estate properties, with operations in Israel and abroad.
In March 2003, it
was reported that subject won a tender to supply transformers to the ISRAEL
ELECTRICITY CORP., for a sum of NIS 114 million.
Among other
contracts received during 2003: transformers to an American company, for a sum
of US$ 3.2 million; a US$ 2 million deal to provide transformers to LCRA of the
USA; a NIS 20 million tender to provide power systems to ELTA ELECTRONIC
INDUSTRIES (of the ISRAEL AEROSPACE INDUSTRIES)
In December 2004,
it was reported that subject won a NIS 34.3 million tender of ISRAEL
ELECTRICITY CORP.
In November 2005,
it was reported that subject will supply transformers worth of US$ 22 million
to a subsidiary of CON-EDISON of the USA.
In May 2007, parent ELECTRA, via subsidiary O.T.S., acquired 85% of
Nigerian electro-mechanical contractor ETCO NIGERIA LTD., in consideration of
US$ 11.3 million. ETCO has 40 years reputation, with 1,000 employees in Nigeria
and annual turnover of US$ 25 million.
In July 2007
subject's parent ELECTRA signed an agreement with Boaz Yona, who controls the
HEFTSIBA Group, according to which ELECTRA will acquire 90% of HEFTSIBA
HOUSING, who also controls 3 subsidiaries, public companies whose shares are
traded on the Tel Aviv Stock Exchange, all in consideration of NIS 30.1
million. HEFTSIBA Group was considered the 3rd largest construction
company in Israel, and a large client of the ELECTRA Group.
In the beginning
of August 2007 (paralle to ELECTRA'a annoncement it is calling off the deal),
came the collosal collapse of th HEFTSIBA Group, after it
encounting grave financial difficulties, revealing total debts of over NIS 1
billion.
Following the
collapse, ELECTRA included in their third quarter of 2007 reports, a provision
for bad debts in total of NIS 169 million.
In December 2007,
it was reported that subject won a NIS 56 million tender of ISRAEL ELECTRICITY
CORP. for the design, manufacturing and supply of 2 giant transformers to the
Haifa power station. The transformers scheduled to be supplied by 2009 and the
ELECTRICITY CORP. has an option to increase the order with another transformer.
SUMMARY
Good for trade
engagements and for credits of several US$ millions.
RATING
EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
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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 |
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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 |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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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 |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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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%)