MIRA
INFORM REPORT
|
Report Date : |
12.10.2011 |
IDENTIFICATION DETAILS
|
Name : |
HAIFA CHEMICALS LTD. |
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Registered Office : |
P.O. Box 10809, Haifa Bay Haifa Bay Industrial
Zone Haifa 26119 |
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Country : |
Israel |
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Date of Incorporation : |
16.03.1966. |
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Com. Reg. No.: |
52-002721-0 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Developers, manufacturers, exporters and marketers of specialty fertilizers
for agriculture and horticulture, mainly (some two thirds of turnover)
potassium nitrate (KNO3), and others (e.g. phosphoric acid, sodium
tri-polyphosphate, special NPK fertilizers, magnesium nitrate), food
additives, as well as industrial chemicals. |
RATING & COMMENTS
|
MIRA’s Rating : |
Ca |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
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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Status : |
Good |
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Payment Behaviour : |
Usually Correct |
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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 – March 31st, 2011
|
Country Name |
Previous Rating (31.12.2010) |
Current Rating (31.03.2011) |
|
Israel |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
Company name and address
HAIFA CHEMICALS LTD.
Telephone 972
4 846 96 11
Fax 972 4 846 96 30
P.O. Box 10809, Haifa Bay
Haifa Bay Industrial Zone
HAIFA 26119 ISRAEL
Head Office:
Matam Building 30, P O Box 15011, Haifa 31905, Israel
HISTORY
& LEGAL FORMATION
Originally incorporated as a public limited company and registered as such
as per file No. 52-002721-0 on the 16.03.1966.
Converted into a
private limited company and registered as such as per file
No. 51-136932-4 on the 28.02.1989.
Re-converted into a
public limited liability company and registered as per file
No. 52-003945-4 on the 02.06.1993.
Later, after a change in subject's statute, subject became again a private
limited company (same registration number).
SHARE
CAPITAL
Authorized share capital NIS 100,000,000.00, divided into -
100,000,000 ordinary
shares of NIS 1.00 each,
of which 55,032,581 shares amounting to NIS 55,032,581.00 were issued.
SHAREHOLDERS
Subject is fully owned by TRANS-RESOURCES INC. (TRI), of the USA, part of
the TRUMP Group.
In 1986, TRI acquired its shares in subject from the State of Israel.
TRI is controlled by Jules Trump and his brother, both of the U.S.A.
The Trump Bros. reached control in TRI at the end of September 2008 (circa
66%), after they purchased some 19% from Sagi Genger, son of Arie Genger. Until
then, Arie Genger was the dominant figure and controlled HAIFA CHEMICALS since
1986 (now holds the reminder 34%, with his daughter).
Reportedly, this was a hostile takeover, after Sagi Genger sold most of his
shares without his father’s consent.
DIRECTORS
1. Nadav Shachar, General Manager,
2. Jules Tramp.
BUSINESS
Developers, manufacturers, exporters and marketers of specialty fertilizers
for agriculture and horticulture, mainly (some two thirds of turnover)
potassium nitrate (KNO3), and others (e.g. phosphoric acid, sodium tri-polyphosphate,
special NPK fertilizers, magnesium nitrate), food additives, as well as
industrial chemicals.
95% of sales are exports to more than 100 countries worldwide.
In mid June 2011 subject decided to closed its plant in Haifa Bay
Industrial Zone and cease manufacturing at least till September due to the
workers' strike (began in early May) and currently taking place (see more in below).
Among local customers: AMGAL CHEMICALS PROD
Among local suppliers: ISRAEL CHEMICALS (main supplier), LINE SAKIM,
CHEMITAL, EMIL K. METALS, ARDAN CONTROL-TECH, DEPOTCHEM, ITZHAK SHINITZKY, P.A.T. COMPRESSED AIR TECHNOLOGIES, EUTEOS, MODCHEM, K.L.A TRADE
& ENGINEERING, MEGACHEM, GAL
PALLETS, CHEMIART, FIBER TECHNIC, etc.
Operating from headquarters premises (offices, plant, storage facilities),
on an area of 250,000 sq. meters, in the Haifa Bay Industrial Zone, Haifa and
from subsidiary HAIFA SOUTH plant, on an area of 250,000 sq. meters, in Mishor
Rotem in the Northern Negev. Both premises’ land is very long-term leased from
the State, practically owned.
Also operating from a plant in Lunel, France and from further offices,
storage facilities and from sales offices worldwide.
Having 550 employees in subject’s Group in Israel (same as in the beginning
of 2010, had 500 employees in 2008 and 2007) and 700 employees in the HAIFA
CHEMICALS Group globally.
Subject is also using some 150 subcontractors’ workers.
MEANS
From mid 1990s
until around 2003, subject suffered from losses and entered into heavy debts.
However, subject enjoyed a dramatic positive change in its profitability in
recent years, and along with arrangements reached with its bankers (Bank
Hapoalim, Israel Discount Bank and Industry Development Bank)
concerning spreading its debts return schedules, subject’s financial status
improved.
According to
reports from September 2008, subject carried around NIS 900 million debts to their
bankers, mainly to Bank Hapoalim (NIS 600 million), scheduled to be covered by
end of 2009. NIS 288 million is owed to Israel Discount Bank and NIS 72 million
to Industry Development Bank.
Subject is an “Approved Enterprise” and as such enjoys tax benefits and
State incentives. In December 2002, the Israeli Investment Center approved a
US$ 6.6 million investment plan for the expansion of the Group’s plant in
Mishor Rotem.
Current stock was valued at US$ 100,000,000 in March 2011 (same as in the
beginning of 2010), though currently we assume it is well lower due to the halt
in manufacturing and on-going strike.
Value of Machinery & Equipment: US$ 500,000,000.
According to a report from May 2009 subject's 2008 equity was NIS
660,000,000.
There are 14 charges for unlimited amounts registered on the company's
assets, in favor of State of Israel, local banks and
REVENUES
Consolidated 2005 sales claimed to be US$ 390,000,000.
Consolidated 2006 sales claimed to be US$ 400,000,000.
Consolidated 2007 sales claimed to be US$ 450,000,000.
We are informed by
subject’s controller that there has been a significant rise in sales during
2008 comparing to parallel period in 2007, chiefly in view of the sharp rise in
inputs prices.
According to
reports 2008 sales were NIS 2,300,000,000, ending with a profit of NIS 500,000,000.
Sales as informed
to us by subject’s CFO:
2009 sales were
US$ 600,000,000, of which 95% were for export.
2010 sales were US$ 600,000,000, of which 95% were for export.
According to a report from July 2011, there has been a decrease of 40% in
sales for export since May 2011 due to the workersw' strike currently taking
place (see more in CHARACTER).
OTHER COMPANIES
100% subsidiaries:
HAIFA CHEMICALS SOUTH LTD., manufacturers, exporters and marketers of
specialized fertilizers for agriculture and food additives.
HAIFA CHEMICALS HOLDINGS LTD.
HAIFA CHEMICALS CHINA,
HAIFA CHEMICALS INDIA,
HAIFA CHEMICALS R.S.A., South Africa,
HAIFA CHEMICALS (HELLAS) S.A., Greece,
HAIFA CHEMICALS NORTHERN EUROPE, Belgium,
HAIFA NUTRITECH INC., USA,
HAIFA CHEMICALS SOUTH AMERICA (ARGENTINA) LTD.
Parent TRI also holds: NACHURS ALPINE SOLUTIONS (NAS), Canada,
manufacturers and marketers of liquid fertilizers.
BANKERS
Bank Hapoalim
Ltd., Main Haifa Branch (No. 700), Haifa.
Bank Leumi
Le’Israel Ltd., Main Haifa Branch (No. 876), Haifa.
Israel Discount
Bank Ltd., Main Haifa Branch (No. 070), Haifa.
CityBank, Tel Aviv Branch (No. 001), Tel Aviv.
CHARACTER
AND REPUTATION
In May 2011 subject's workers went on strike (which continues to-date),
demanding an improvement in salary and benefits. This is considered a severe
and flagship strike from workers aspect, backed up by other parties. Both sides
are adamant in their positions, with severe damages for both sides (striking
workers do not receive salaries) and apparently no solution is seen in sight.
As reported, although the management claims it has sufficient stock till
September, in practice, export sales have declined by some 40%, and subject's
clients are turning to subject's competitors for supplies (it should be noted
that also other Israeli clients are suffering from the strike).
In June 2011 it was reported that subject is closing the plant in Haifa,
halting all manufacturing activities at least until the coming September.
In July 2011 the Court nominated former Judge Hon. Ms. Dina Efrati to serve
as an arbitrator between subject and the workers' union (who filed a claim
against subject for NIS 3 million).
It should be noted that during the past years subject has suffered from
several workers disputes.
In July 2011 the Ministry of Environment has revoked subject's Toxic
Permit, and ordered subject to evacuate all the poisons and hazardous
substances in the Haifa plant, as well as to evacuate subject's huge ammonia
tank located in Haifa bay. In August 2011 it was reported that the Ministry of
Environment has opened a criminal investigation against subject due to its
failure to comply with the evacuation order.
Subject is currently also arguing over the sum of NIS 28 million it was
ordered to pay as part of the cleaning of the Kishon River, which subject was
one of its polluters, claiming its damages are much lower.
Despite our efforts, we were unable to speak with subject's officials,
as they were always unavailable. We left messages which so far remain
unanswered.
During past years, several lawsuits and requests for class motion acts were
filed against subject and other plants regarding environmental damages
(considered as a main source of contamination in the area), and subject was
convicted in some cases (relatively minor). On the other hand, subject has been
investing millions in the environmental field in recent years it.
In April 2007, the Haifa Magistrate Court rejected the motions for class
actions against subject and others, considering that charging the plants may
have severe economic implications on the plants.
In March 2009 subject was granted from the first time since its inception,
a business permit from the Haifa Municipality, after subject finally handled
all building and environmental aspects which were considered faulted all the
years.
Now having the official approval, it will allow subject to raise capital
from non-banking corporations, which was thus far prevented from subject.
In December 2009 it was reported that subject is lowering the emission of
greenhouse gasses and the balance quota will be traded and sold onward (via
CITYBANK). Quota is valued at US$ 60 million.
Following the financial crisis that subject experienced during the years
between mid/ late 1990s and beginning of 2000s, there were reports on claims by
bank creditors, both of subject and on parent TRI (who loaned from Bank
Hapoalim NIS 230 million for acquiring subject). Eventually, subject reached
arrangements with its bankers and in 2008 TRI paid back its loan to the bank as
well.
Subject’s officials claimed that they managed to become profitable since
2003.
Subject was negatively affected by the global economic crisis during 2009,
as farmers lowered significantly their demand for fertilizers. Subject’s Group
took drastic steps to confront the situation and sharp decrease in sales and
amounting stocks. Since 2010 2nd half a recovery trend has been noted in
world’s markets, with its positive effects on subject as well.
Subject decided in April 2009 to close all its local manufacturing lines,
sending many of its workers on a compulsory leave, due to a dispute with DEAD
SEA WORKS LTD., a subsidiary of ISRAEL CHEMICALS (ICL) concern, the main local
supplier of potash (raw material for subject’s main product - potassium
nitrate), regarding potash allegedly unreasonably high price. Subject also
approached the government, complaining of ICL abuse of monopoly powers (which
holds the State’s concession for excavating potash).
Subject’s CFO, Tamir Kadishi, informed us that their whole maneuver has
been planned in advance and subject equipped itself with high stocks of potash
(in order to answer all planned clients’ demands) and arrangements with its
bankers. Subject purchased in 2008 potash from ICL in volume of US$ 100
million. According to the CFO, this comprises over 10% of DEAD SEA WORKS’
production of potash, which empowers subject in its straggle. Later subject
resumed work as usual, the dispute went to arbitration (meanwhile purchase
price of potash was cut to half - US$ 300 per ton), and the arbitrator was to
set a price that will stand for the next 10 years.
In January 2011 it was reported that subject halted its plant activities
due to lack of potassium (following a strike in DEAD SEA WORKS), and is sending
its employees on vacation. However subject's CFO informed us that subject is
operating as usual with no problems, explaining that the reports are part of
their way to gain leverage on subject's potassium (see further on the dispute
with DEAD SEA WORKS).
Subject is ISO 9001, ISO 14001, OHSAS 18001 certified. Also GMP qualified
for food products.
In May 2006, it
was reported that subject won 9 contracts, estimated at NIS 12 million for
supply of fertilizers for a large agricultural project in South Australia.
In May 2007 it was reported that subject was chosen to be a leading
supplier of melted salts (potassium nitrate) in a huge project in the solar
energy field being erected in Spain ("Andsol 1"), a project which is
worth € 260 million.
This project puts subject in a leading position for future solar energy projects.
Subject's part in the project is valued at US$ 15 million for the next 2 years.
In July 2007 it was reported that subject's Board approved an agreement
with EDELTECH for the erection of a private power station based on natural gas
in subject's plant in Mishor Rotem. The agreement was finalized in June 2008,
and the power station is scheduled to be operative by 2012. The 1st
stage would be of a power station in capacity of 100mv, with an investment of
US$ 150 million.
The September 2008 hostile takeover of control in subject by the Tramp
family of the USA on account of Arie Genger led to some turbulence in subject’s
top management, including the topping down of former chairman and Acting
General Manager Avi Philosoph, Mr. Genger’s right arm (and the person
considered responsible for subject’s recovery in recent years) and the
nomination of Nadav Shachar as General Manager. Mr. Shachar served as the
General Manager of the AFRICA ISRAEL Concern.
In August 2009 subject announced the sale of its holdings in ELGO
IRRIGATION LTD., (77%) for the sum of NIS 12.4 million.
In August 2009 it was reported that subject signed a SAP implementation
deal in its plants IT systems, in an estimated value of NIS 7 million.
In December 2009 it was reported that Egyptian Gas supplier EMG will
supply subject’s plants with natural gas valued in value of US$ 70 – US$100
million, this until the planned construction of a private power plant in
subject’s premises.
The local Chemical
industry is considered one of the strongest in the market, with impressive
growth trend in recent years. The chemical industry includes minerals
extracted, refinery and petrochemical industry, manufacturing of pesticides for
agriculture, pharmaceuticals and bio-technology industries, as well as other
consumer products related industries, including paints, cosmetics, cleaning
materials and others. The industry employs 30,000 employees.
Total turnover of
the local Chemical Industry in 2008 amounted to US$ 24 billion, comprising 30%
of Israel’s total industrial turnover. Sales for export recorded US$ 13.6
billion, comprising some 35% of Israel’s total export, continuing years of
constant growth. Growth trend reversed in 2009, due to the economic crisis in
the global markets. The Chemicals (incl. Pharmaceuticals) and Oil Refinery
production in 2009 marked a 7% decrease from 2008. Export of Industrial
Chemicals plunged by 23.5% in 2009 from 2008, and totaled US$ 10.4 billion.
The Chemical
sector recovered in 2010, where export of Industrial Chemicals rose by 34.3%
from 2009 to US$ 13.95 billion, reflecting the recovery in global markets.
According to Central Bureau of Statistics data, investments
in imported machinery and equipment from for the Chemical Industries (incl.
Pharmaceuticals) in 2010 summed up to NIS 1,045 million, representing a 24.4%
decrease in real terms from 2009 (after 0.5% decrease in 2009 from 2008 and
18.7% increase in 2008 from 2007).
SUMMARY
Although in
principle subject is good for trade engagements and high credits, for the time
being, due to the exceptionally long and severe strike affair, dealings are
recommended on a secured basis.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.49.03 |
|
|
1 |
Rs.76.60 |
|
Euro |
1 |
Rs.66.80 |
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 |
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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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.