MIRA INFORM
REPORT
|
Report Date : |
13.01.2011 |
IDENTIFICATION DETAILS
|
Correct Name : |
E C I TELECOM LTD. |
|
|
|
|
Formerly Known As : |
ELECTRONIC CORPORATION OF ISRAEL LTD |
|
|
|
|
Registered Office : |
|
|
|
|
|
Country : |
|
|
|
|
|
Financials (as on) : |
30.06.2007 |
|
|
|
|
Date of Incorporation : |
27.04.1961 |
|
|
|
|
Legal Form : |
Public Limited Liability Company |
|
|
|
|
Line of Business : |
Developers, Manufacturers, Exporters and Marketers supplier of
networking infrastructure for carrier and service provider networks worldwide |
RATING & COMMENTS
|
MIRA’s Rating : |
A |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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 |
|
Status : |
Good |
|
Payment
Behaviour : |
No Complaints |
|
Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 30, 2010
|
Country Name |
Previous Rating (01.04.2010) |
Current Rating (30.06.2010) |
|
|
a2 |
a2 |
|
Risk Category |
ECGC Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
Company name & address
E C I TELECOM LTD.
Telephone 972 3 926 65 55
Fax 972 3 926 65 00
Kiryat Matalon Industrial Zone
PETACH TIKVA-49517-ISRAEL
HISTORY & LEGAL FORMATION
Originally
incorporated as a private limited company and registered as such as per file
No. 51-029111-5 on the 27.04.1961.
On the 17.04.1997,
subject merged with TACHTEL LTD.
Converted into a
public limited liability company and registered as such as per file No.
52-003290-5 on the 03.12.1981.
In 1982 published
a prospectus offering shares to the public on the NASDAQ Stock Exchange.
Originally
incorporated under the name of ELECTRONIC CORPORATION OF ISRAEL LTD., which
changed to the present name on the 30.05.1985.
In March 1999
subject completed a merger with sister company TADIRAN TELECOMMUNICATIONS LTD.,
both part of the KOOR Group (then, later also part of the I.D.B concern).
On the 14.03.2002,
INOVIA TELECOMS EXPORT LTD. merged into subject.
On the 28.09.2007,
following the completion of the acquisition of subject by new investors,
subject re-converted into a private limited company (registration number
remains same). As a result, shares were de-listed from trade on the NASDAQ
Stock Exchange.
At the same date,
EPSILON 3 LTD. was merged into subject, and on 26.11.2007 EPSILON 2 LTD. was
merged into subject.
SHARE CAPITAL
Authorized share capital
300,000,000 ordinary
shares of
of which
196,314,096 shares amounting to
SHAREHOLDERS
Subject is fully
owned by EPSILON 1 LTD., owned by:
1. SWARTH GROUP, controlled by Shaul Shani,
2. ASHMORE INVESTMENT MANAGEMENT
LIMITED., a British group of certain funds.
In September 2007,
above shareholders completed the acquisition of subject from the I.D.B./ KOOR
Group and other smaller shareholders of subject, in a transaction valued at
approximately US$1.24 billion, in cash.
DIRECTORS
1. Shaul Shani, Chairman,
2. Adi Marom,
3. Derek Zisman,
4. Creig Webster, both latter foreign citizens.
PRESIDENT AND CEO
Rafi Maor.
BUSINESS
Developers, manufacturers, exporters and
marketers supplier of networking infrastructure for carrier and service
provider networks worldwide. From tier-one national network operators to city
carriers, ECI's equipment serves as the platform for key applications including
business services, voice, video and wireless backhaul.
Some 90% of sales are for export, worldwide (mainly: Europe,
Main subcontractor (EMS): FLEXTRONIC
It was reported also on shifting manufacturing to
Among many clients: AT&T, BT Group, HONG KONG TELECOM, DEUTSCHE
TELEKOM, TELECOM ITALIA, SK (Korea), etc. ATLAS TELECOM (Romania), BEIJUNG POWER, ZHEJIANG UNICOM (China), GAIL (India),
DIGICEL (Caribbean), OJSC URALSVYAZINFORM (Russia), LATTELECOM (Lithuania), RTE (France), ELRO AMBA (Denmark), VERIFONE, SOUTH
CENTRAL (USA), T-CD (Czech Republic), etc.
Among local suppliers: TEL-AD ELECTRONICS,
EL GEV ELECTRONICS, TOYO RAM ELECTRONICS, I.M. TECHNOLOGICAL, COMTEL ISRAEL,
SILARAM, PHOENIX TECHNOLOGIES, DATA J.C.E, T & T TELECOM, etc.
Operating from rented premises, on an area
of over 23,000 sq. meters, in
Having some 2,500 - 2,700 employees, of
which around
MEANS
Consolidated B/S
shows (last obtainable):
US$
(millions)
30.06.2007 31.12.2006
ASSETS
Current assets
Cash and cash equivalents 149.3 92.7
Short term investments 90.7 80.7
Trade receivables 167.5 187.4
Other receivables and prepaid expenses 34.7 31.9
Inventories and work in progress 160.9 172.5
603.2 565.2
Long term
receivables & marketable securities 53.3 79.13
Assets held for
severance benefits 20.8 20.5
Investments 13.7 12.0
Property, plant
and equipment (net) 123.1 123.9
Goodwill 39.3 39.3
Software
development costs (net) 13.8 12.9
Other assets 53.3 43.0
920.7 895.9
====== ======
LIABILITIES
Current
liabilities 183.3 203.4
Long term
liabilities 43.4 44.6
Equity
694.0 647.8
920.7 895.9
====== ======
Subject’s acquisition (for US$ 1.24 billion)
in 2007 was financed by bank credit (around US$ 1 billion) and own equity,
which laid a debt of hundreds million
In July 2008 subject raised US$ 200 million
in a private issuing of stock to shareholders.
In March 2010 it was reported that PLENUS
MEZZANINE FUND
Subject is an
“Approved Enterprise” and as such enjoys tax benefits and State incentives.
Subject also received grants from the Chief Scientist, in total estimated accumulative
value of US$ 100 million (part of which will have to be given back to the State
following the change in ownership).
As part of subject’s new owners strategy in
September 2008 subject sold its main property in Petach Tikva (ECI headquarters
premises) to CLAL INSURANCE for
According to media reports from November 21st,
2010 (today), subject's main shareholder Shaul Shani put subject for sale
(100%) based on a company value of US$ 2.5 billion. Reportedly, a letter of the
offer was also given to
There are 5
charges for unlimited amounts, as well as 5 charges for the total of US$
20,344,666.00 and £ 21,000,000.00 registered on the company's assets (financial
assets), in favor of CREDIT SUISSE BANK., Mizrahi Tefahot Bank Ltd., Israel
Discount Bank Ltd. Bank Leumi Le'Israel Ltd. and a local company.
ANNUAL SALES
·
2006 consolidated sales were US$ 656,300,000
million, making a gross profit of US$ 268,300,000, an operating income of US$
19,200,000, making a net profit of US$ 22,100,000 (had net profit of US$
· 2007 consolidated sales were US$ 660,000,000 million, making a gross profit of US$ 281,000,000 and an operating income of US$ 39,200,000.
· According to reports, 2008 sales were around US$ 710,000,000.
· According to reports, 2009 sales were around US$ 650,000,000.
· 2010 sales reported to be well higher than 2009 (current reports indicate between US$ 700 – US$ 800 million).
OTHER COMPANIES
Among
subsidiaries:
·
ECI TELECOM INC., 100%,
·
ECI TELECOM GmbH, 100%,
·
ECI TELECOM
·
ECI TELECOM (H.K.) LTD., 100%,
·
ECI TELECOM
·
ECI TELEKOM POLSKA SP. Z OO.,
·
ECI TELECOM DO BRASIL LTDA, 100%,
BANKERS
· Bank Hapoalim Ltd., Central Branch (No. 800), Tel Aviv,
· Bank Leumi Le’Israel Ltd., Central Branch (No. 600), Tel Aviv.
CHARACTER AND REPUTATION
Nothing
unfavorable learned.
However it should
be noted that subject is operating in the electronic industry, which was
adversely hit by the global economic crisis, resulting in fall in demand for
the local electronics sectors’ products and services.
As part of the
efforts to confront the crisis, in April 2009 subject announced the lay-off of
100 employees (50 of them in
So far subject's officials refused to disclose any data. They asked us to
send them a fax with our request – which we did – and they will consider our
request.
In case they return to us with further data, we will update you accordingly.
Subject is one of
the veteran and largest electronics industrial companies in
Until mid 2007, it was
part of the KOOR Group, of the IDB concern (40%), who was looking for outside
investors that will acquire subject. In mid
The British ASHMORE
Fund that invested in subject, specializes in investment in developing markets
and manages capital of US$ 29 billion.
Shaul Shani has
already worked with subject in the telecom venture GVT in
In 2001 subject
completed a strategic re-organization scheme, splitting activities into 5
separate business units, thus turning subject into a holding company. However,
following the crisis in the global telecommunications markets n 2001/2, the
plan failed, and couple of year later subject remerged the split activities
back into themselves.
In 2003 sold its
subsidiary INNOWAVE to ALVARION, for US$ 20 million.
In March 2004,
subject won a US$ 100 million contract to provide DSL Systems to DEUTCHE
TELECOM.
During 2006, subject acquired
In February 2006, subject announced a 5-years contract of over US$ 20 million with SK Concern of Korea. In March 2006, it
was reported that subject signed a major
agreement with DEUTSCHE TELEKOM, in a
project for offering services of HDTV over IPTV to million clients. Subject's
share is estimated at € 140-200 million.
Other contracts in 2006: in
Major deals in
2007: estimated US$ 10 million with Ukraine's largest telecom company
UKRTELECOM; with BHARTI AIRTEL of India
estimated at US$ 50 million; US$ 5 - 7 million supply contract for HENAN
POWER, a Chinese Electricity company; South African operator NEOTEL - US$ 10
million.
In January 2008, as part of streamlining
measures, subject dismiss hundreds of workers in its supply chain positions, in
the Petach Tikva and Ofakim plants (as well as the Jerusalem integration plant
whose activities merged within headquarters). Most employees were hired by the
outsourcing company FLEXTRONICS (ISRAEL), who have been working with subject
already and will be responsible for the supply chain tasks.
In April 2008 it was reported that ZRICHA
Group will purchase from subject full control of ELECTO GALIL LTD. for
In April 2008, it was reported that subject
will supply Russian telecom operator SYNTERRA with systems in an estimated
value of US$ 50 million. Subject operates some 12 years in the Russian market
and during recent years sold its products in tens of millions.
Other deals in 2008: In July 2008 it was
reported that subject, together with ALVARION and CERAGON NETWORKS, will
construct the first WiMax network in
In November 2008 it was reported that
subject will sell the intellectual property of the start-up CHIARO, which
subject was its main creditor for US$ 2.5 million.
In January 2009 it was reported that subject
will construct an application project for RTE of France for several
In February 2009 subject won a US$ 10
million contract in Lithuania (LATTELECOM).
In May 2009 it was reported that subject
will upgrade deutsche telekom's
network for US$ 100 million.
In June 2009 it was reported that subject
will supply equipment to TATA TELESERVICES of
In July 2010 it was reported that subject
won a huge contract of OPENREACH of BT Group to upgrade communication broadband
infrastructure in the U.K for US$ 800 million.
In July 2010 it was reported that HP will
manage subject's computing (cloud computing) for
In September 2010 subject opened its new R
& D center in Omer, with a planned investment of US$ 10 million in the next
2 years.
In September 2010 subject's General Manager
said in an interview that subject is intending to make public offering and
become public again in 2011. So far these plans did not materialize.
In October 2010 it was reported that Czech
company T-CD chose subject to implement optic communication infrastructure.
In October 2010 it was reported that subject
is in negotiations to merger with GILAT SATELLITE NETWORKS LTD., a public limited
company whose shares are traded on the Tel Aviv and NASDAQ Stock Exchanges,
provider of products and professional services for satellite-based broadband
communications networks worldwide (current market value 200 million), in a
share swap deal, intending to give merged company a value of US$ 900 million to
US$ 1 billion. This indicates that the current offer (November 2010) to sell
subject for US$ 2.5 billion (see MEANS above) may be a well too high appraisal.
The media report is based on publications by subject, and also mentions sales
figures for subject of several
In November 2010 it was reported that subject issued firing notes for 100
of its employees and announced its employees on a one non-paid day leave each
month, that in order to avoid further dismissals. Nevertheless, subject’s
General Manager said that subject will end the year with a higher workforce
than to-date, meaning some 170 new employees will be recruited.
The global economic crisis which erupted in the last third of 2008
adversely affected the global electronics and hi-tech markets and in-turn, hit
the local electronics industry, resulting in dismissals, decrease and
cancellations in orders. Nevertheless, local
companies in the Electronics and Software branches in general have proven
ability to withstand light of the crisis, much given the fact that since mid
2009 there has been some recovery in global hi-tech markets.
According to the Israel
Association of Electronics & Software, hi-tech industries sales in 2009
reached US$ 22.3 billion, up from US$ 21.3 billion in 2008 (which marked 10%
decrease from
The division of companies by production within the
branches is as follows: circa 24% Software, 23% Civilian Communications &
Telecommunications, around 18% Industrial Equipment, over 13% Defense Systems,
over 13% Components and close to 9% Medical Systems.
There are 68,000 employees serving in the Electronics sectors, and
thousands more in supporting these branches.
Investments
(capital formation) by the hi-tech industries in machinery and equipment from
import in 2009 plunged by 57% (in real terms) from 2008 and summed up to
SUMMARY
Notwithstanding the refusal to disclose
details, considered good for trade engagements.
Maximum unsecured
credit of up to several
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.45.16 |
|
|
1 |
Rs.70.64 |
|
Euro |
1 |
Rs.58.68 |
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 |
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 |
|
---- |
NB |
New Business |
---- |
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%)
This report is issued at your request without any risk
and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its
officials.