MIRA INFORM REPORT
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Report Date : |
29.10.2011 |
IDENTIFICATION DETAILS
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Name : |
MAKHTESHIM CHEMICAL WORKS LTD |
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Registered Office : |
P.O. Box 60, Beer Sheva (84100), Hebron Road, Industrial Zone, Beer Sheva 84244 |
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Country : |
Israel |
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Financials (as on) : |
30.06.2011 |
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Date of Incorporation : |
17.07.1952 |
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Legal Form : |
Public Limited Company |
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Line of Business : |
Developers, manufacturers and marketers of crop protection products -
pesticides, insecticides, herbicides, polyester resins, photo-chemicals, etc |
RATING & COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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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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 – September 30th, 2011
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Country Name |
Previous Rating (30.06.2011) |
Current Rating (30.09.2011) |
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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 & address
MAKHTESHIM CHEMICAL WORKS LTD.
Telephone 972 8 629 66 11
Fax 972 8 629 69 91
P.O. Box 60, Beer
Sheva (84100)
Hebron Road
Industrial Zone
BEER SHEVA-84244 ISRAEL
HISTORY & LEGAL FORMATION
Originally incorporated as a public limited company, registered as such
as per file No. 52-002396-1 on the 17.07.1952.
In May 1992 published a prospectus offering shares to the public and
started trading through the Tel Aviv Stock Exchange.
In June 1998 amalgamated with Agan
Chemical Manufacturers LTD., forming the MAKHTESHIM AGAN Group.
As of May 1998, due to change of ownership, subject's shares were
de-listed from trade on the Tel Aviv Stock Exchange, following which subject
converted into a private limited company (registration number remain the same).
SHARE CAPITAL
Authorized share capital NIS 92,000,000.00, divided into -
92,000,000 ordinary shares of
NIS 1.00 each,
of which 90,238,074 shares amounting to NIS 90,238,074.00 were issued.
SHAREHOLDERS
Company is fully
owned by MAKHTESHIM – AGAN INDUSTRIES LTD. (hereinafter M.A.), owned by:
1.
CNAC INTERNATIONAL PTE LTD., 60%, of Singapore,
fully owned by CHINA NATIONAL AGROCHEMICAL CORP. (“ChemChina”), a People's
Republic of China company,
2.
KOOR INDUSTRIES LTD., 40%, a public limited
company, whose shares are traded on the Nasdaq Stock Exchange and Tel Aviv
Stock Exchange, part of the I.D.B. Concern, controlled by Nochi Dankner
(mainly), Isaac Manor and Livnat Family.
On the 17.10.2011
a transaction was completed, according to which ChemChina acquired 52.3% of
M.A's shares held by the public for US$ 1,270 million plus 7% of the shares
held by KOOR for US$ 168 million, according to a value of US$ 2.4 billion for
M.A. (transaction was carried on in a way of a reverse tri-angle merger).
Following the deal completion, M.A. became a private limited company and shares
were de-listed from trade on TASE (on 17.10.11), although its bonds are still
publicly traded.
DIRECTORS
1.
Aviram Lahav, CFO of M.A.,
2. Yoav Zeif, VP Marketing of M.A.,
3. Chen Lichtenstein, VP Business Promotion of
M.A.,
4. Morris Zelkha.
Yang Xingqiang of
ChemChina is M.A. Chairman since 17.10.11.
Erez Vigodman
remains M.A. Group's General Manager & President.
GENERAL MANAGER
Arie Elyashiv.
BUSINESS
Developers,
manufacturers and marketers of crop protection products - pesticides, insecticides,
herbicides, polyester resins, photo-chemicals, etc.
Subject is
Israel’s largest company in its field and is a part of the MAKHTESHIM-AGAN
Group.
M.A. exports 96%
of its production to more than 100 countries, through subsidiaries and distribution
branches worldwide.
Among local
clients: HAMASHBIR FOR AGRICULTURAL, CHEMADA FINE CHEMICALS CO.
Among local
suppliers: G.G. YAROM GETTER, MODCHEM, GOLD BAR, SANO INTERTRANS, ATEKA, PETRUS
TECHNICAL SUPPLIES, ALMOR FIBREGLASS, DORMEX TRADE, DEAL ENGINEERS, YAMATON,
TAGAD CHEMICLS, APPLIED CHEM, K.L. TEX AND SONS, etc.
Sole pesticides
sub-contractor for BAYER - of Germany.
Raw materials purchase agreement with DOW CHEMICALS - of U.S.A.
Also manufacturing for a/m resins under the brand name DERKANE.
Subject also has cooperation agreements with CRAY VALLEY of France, and
MONSANTO.
Operating from M. A. Group headquarters offices (rented, on an area of
3,870 sq. meters) in Golan Street, Arava House, AirPort City Park, near the Ben
Gurion International Airport.
Production from main plant, owned, in Hebron Road, Industrial Zone, Beer
Sheva, on 407,000 sq. meters plot on which 37,000 sq. meters are built, and a
plant (owned by M.A.) in Ramat Hovav, on an area of 1,086,000 sq. meters, on
which 170,000 sq. meters are built.
M. A. Group also operates from 2 plants in Brazil (subsidiary MILLENIA)
and smaller facilities in Colombia, Spain, Italy and Greece.
Distribution through 23 marketing companies and offices worldwide.
Having some 3,940
employees serving the whole M.A. Group, of which 1,440 employees in Israel.
MEANS
In December 2006 and March 2009 M.A. completed a capital raise of NIS
2.35 billion and NIS 1.2 billion, respectively, with bonds issue via TASE.
Financial data is included in the consolidated financial statements of
parent company, MAKHTESHIM – AGAN INDUSTRIES LTD., which shows:
US$
(millions)
30.06.2011 31.12.2010
ASSETS
Current assets
Cash
and short term investments 499.4 423.0
Customers 729.1 582.2
Other receivables 205.1 224.0
Inventories 949.3 972.4
2,382.9 2,201.6
Long term investments 186.6 170.4
Fixed assets (net) 647.4 619.7
Deferred tax 72.4 73.5
Intangible assets, net 689.1 653.5
1,595.5 1517.1
3,978.4 3,718.7
====== ======
LIABILITIES
Current
liabilities 1,577.0 1,504.2
Long-term
liabilities
Loans from banks 75.0 74.4
Debentures 896.9 848.0
Other long-term liabilities 168.4 144.3
1,140.3 1,066.7
Equity 1,261.1 1,147.8
3,978.4 3,718.7
====== ======
The ChemChina
transaction includes, besides the sum paid for the shareholders, a non-recourse
loan of US$ 960 million for KOOR for 7 years from Import & Export Bank of
China, where KOOR will mortgage its 40% shares in M.A., shares which will be
transferred to ChemChina in the end of the period if the parties would not
agree otherwise). Loan agreement was signed in July 4th, backed by
HSBC Bank. According to the agreement, M.A. will go public within the next 3
years in one of the foreign exchanges (Hong Kong, London or New York).
In December 2010 M.A. was forced to ask waivers from its bankers
concerning not meeting certain financial covenants, which the banks accepted
and M.A met the new covenants. M.A's Brazilian subsidiary MILENIA suffered
heavy losses due to mounting competition and the global economic crisis and had
to go massive re-organization – M.A wrote-off US$ 120 million in 2010 in this
regard. Recovery in MILENIA's activities noted in 2011 1stQ.
In July 2011 Maalot rating firm (S&P affiliate) lowered M.A's bond
rating to 'ilA+'.
Subject is an
“Approved Enterprise” and as such entitled for State incentives and tax
relieves. In 1997 subject received approval from the Israeli Investment Centre (IIC)
for an expansion plan for its Ramat Hovav plant (some US$ 60 million). In 1998,
2000 and 2001 the IIC approved investments plans for the expansion of the Ramat
Hovav plant of US$ 4.2, US$ 25 and US$ 14.8 million respectively.
In August 2010 the IIC approved a NIS 20 million investment plan for
subject's plant in Ramat Hovav, of which up to 24% a grant.
There are 8 charges for unlimited amounts registered on the company's
assets, in favor of the State of Israel and a foreign company.
SALES
MAKHTESHIM-AGAN
INDUSTRIES LTD.
Consolidated
Statement of Income
US$
(million)
Year
ended 31.12
2008 2009 2010
Sales 2,535.5 2,214.6 2,362.2
Gross profit 847.7 581.9 649.2
Operating income 367.3 119.7 6.2
Profit (loss) before
taxes on income 270.6 26.0 (121.2)
Net income (loss) 221.0 34.7 (131.9)
====== ====== ======
Most of M.A.’s sales are attributed to its
core activities of chemicals for the agricultural fields. Other fields (food
additives, industrial chemicals, etc.) captured 7.7% of 2010 overall sales.
MAKHTESHIM – AGAN IND. consolidated sales for the first half of 2011
were US$ 1,503.6 million (13.5% increase compared to the parallel period in
2010), making a gross profit 494 million, an operating profit of US$ 199.2
million, and a net profit of US$ 137.3 million.
Subject ended 2007 with a net profit of US$ 100,239,000 (consolidated).
Subject ended 2008 with a net profit of US$ 20,867,000 (consolidated).
Subject ended 2009 with a net profit of US$ 52,122,000 (consolidated).
Subject ended 2010 with a net loss of US$ 40,476,000 (consolidated).
OTHER COMPANIES
NEGEV PROXIDE
LTD., 100%
CELSIUS PROPERTY
B.V., 100%.
MAKHTESHIM – AGAN
INDUSTRIES LTD., parent company, also owns some 50 subsidiaries worldwide,
among them (all fully owned unless otherwise stated):
AGAN CHEMICAL
MANUFACTURERS LTD., which together with subject is responsible for the Group's
main activities. Manufacturers, exporters and marketers of chemicals for
agricultural purposes, i.e. plant growth regulators, plant protection
chemicals, herbicides, etc.
AGAN MARKETING
CHEMICALS LTD.
AGAN AROMA &
FINE CHEMICALS LTD., developers, manufacturers, marketers and exporters of
aroma substances for detergents
LYCORED LTD.,
holds 100% of LYCORED BIO LTD., jointly leading M.A. Group's non-agro activities (e.g. natural food additives, micro encapsulation of natural health materials).
DALIDAR PHARMA ISRAEL (1995) LTD.,
developers, manufacturers and marketers of photo pharmaceuticals (herbal based
remedies).
MILENIA AGROCIENCIAS
S.A.,
MAKHTESHIM AGAN
NORTH AMERICA INC.
FAHRENHEIT
HOLDINGS B.V.,
CELSIUS PROPERTY
B.V.
IRVITA PLANT
PROTECTION N.V.
ALB HOLDINGS U.K.,
QUENA PLANT
PROTECTION N.V.
MAGAN HB B.V.
ARAGONESAS AGRO
S.A., Spain
MAGAN ARGENTINA
S.A., Argentina
MAKHTESHIM AGAN
HOLDING B.V.
MAKHTESHIM AGAN
PARTICIPACOES
MAKHTESHIM AGAN
COSTA RICA SA; MAKHTESHIM AGAN ESPANA SA; MAKHTESHIM AGAN FRANCE SARL;
MAKHTESHIM AGAN ROMANIA SRL; MAKHTESHIM AGAN THILAND LTD.; MAKHTESHIM AGAN
PORTUGAL LTD.; MAKHTESHIM AGAN ITALIA SRL; MAKHTESHIM AGAN INDIA PRIVATE LTD;
MAKHTESHIM AGAN U.K. LTD.; MAKHTESHIM AGAN POLAND SP.ZO.O; MAKHTESHIM AGAN
SWITZERLAND LTD.; MAKHTESHIM AGAN PERU SA, MAKHTESHIM ACAN HUNGARIA K.F.T.;
MAKHTESHIM AGAN SERBIA LTD; MAKHTESHIM AGAN GUATEMALA LTD; MAKHTESHIM AGAN
UKRAINE LTD; MAKHTESHIM AGAN SOUTH AFRICA PTY LTD.
MAKHTESHIM AGAN OF
NORTH AMERICA CANADA INC.
PROFICOL S.A.,
75%, holding PROFICOL ANDINA N.V. and PROFICOL VENEZUELA S.A.
C.F.M. B.V.,
Holland
MAGAN JAPAN CO.
LTD.
MAGAN ITALIA SRL
MAGAN HOLDING GERMANY
GmbH, holds 100% in FEINCHEMIE SCHWEBDA GmbH, and MAKHTESHIM AGAN DEUTCHLAND
GmbH
MAGAN KOREA CO.
LTD.
MILENIA PARAGUAY
S.A.
AGRONICA
AUSTRALASIA PTY LTD. and FARMOZ PTY LTD., Australia
EMERALD
AGROCHIMICAL COMPANY AVV
MILENIA AGRO
CIENCIAS S.A.
DEFENSA S.R.L.
KOLANT S.P.A.
BIOMARK TRADING
HOUSE K.F.T.
FCS FRANCE S.A.
FEINCHEMIE (UK)
LTD.
MA U.S. HOLDING
INC., USA
FARM SAVER GROUP
CONTROL SOLUTIONS
INC., 67%
ALLIGARE LLC, 80%
AGROVITA Spel
(SRO) (Czech Republic), and several more subsidiaries.
And many other
companies in the KOOR Group and I.D.B Concern.
BANKERS
Known to all local
banks, working mainly with Bank Leumi Le’Israel Ltd., Tel Aviv Central Branch
(No. 800), and Beer Sheva Branch (No. 921), Beer Sheva.
CHARACTER AND REPUTATION
Nothing
unfavorable learned in the legal aspect, apart from several legal procedures
which appear to be insignificant, including a motion for class actions (whose
chance to be approved estimated to be slim) and a recent criminal claim for
causing noise and pollution near a village, which harms the population.
Business-wise, the
global economic environment harmed M.A. Group performance, and like others in
their branch, suffering from fall in demand for their products, notably in the
agricultural arena. M.A had to go through a massive reorganization process,
including workers dismissals. In addition, M.A faced a crisis in Brazil, one of
its main markets, following harsh competition and some limitations recently
imposed on sales of Brazilian subsidiary MILENIA.
Subject is
certified with TI 18000, ISO 14001, ISO 9002 and other standard.
MAKHTESHIM AGAN
(M.A.) is considered as the world’s largest producer of generic products for
plant conservation and one of the leading companies in the agro-chemical
sector, ranked 7th in world sales terms in 2010.
After a long
period in which parent company KOOR worked on a strategic move for M.A. (either
a major acquisition or entrance of a strategic investor), it finally announced
in late 2010 on the agreement with Chinese State-owned company and China
largest chemicals company ChemChina, in which ChemChina will acquire control of
M.A. (60%). M.A.’s senior management will remain and ChemChina will appoint the
new chairman for M.A.
This triggered a
workers’ dispute in M.A., fearing most to massive lay-off due to the
possibility that the plants will be moved to China in order to save costs. The
conflict has been resolved in the end of October 2010, with a compromise in
which
KOOR Group remains
a minority shareholder (40%) in subject. KOOR (current market value US$ 600
million) is some 80% owned by the I.D.B Concern, via subsidiaries of IDB DEVELOPMENT CORPORATION LTD.
(also publicly traded on TASE), a local
leading concern, controlled by Nochi Dankner, one of the most influential in
Israel with many holdings in various sectors in the local market.
M.A. went during
2007 through reorganization, based on a strategic plan advised by consulting
firm McKinsey, including unifying the operations and administration of subject
and sister AGAN CHEMICAL MANUFACTURERS LTD.), streamlining measures and sales
promotion. In this context, subject's Workers' Union declared a strike in the
Beer Sheva plant in several occasions.
In
In June
In
During 2004-
* 3 Agro-chemical
American Companies of the FARM SAVER Group, for a total sum of US$ 60 million.
* 67% in CONTROL SOLUTIONS
INC. (CSI), an American pesticide company, for around US$ 15 million.
* FARMOZ,
Australia 4th larges Agrochemical Company for US$ 16 million.
* 50.1% of RICECO
of the USA, developers and manufacturers of herbicides for rice growing.
* 49% of Dutch
company MABENO in shares swap deal (and later in 2008 increased stakes to 55%).
* 70% of Hungarian
distribution company BIOMARK TRADING (and later in 2007 increased stakes to
100%).
In the framework
of its expansion program in the non-agricultural pesticide products, M.A.
acquired in 2006 shares in 2 foreign companies: 30% of ALLIGARE of the USA
(later in 2007 increased to 70% and in 2010 to 80%), and 60% of Italian KOLLANT
for US$ 15 million (in October 2008 increased stake to 100%). In May
In November
In January
In February 2007
it was reported that the whole M.A. Group will purchase raw materials from
China during
In
In addition, M.A.
acquired in 2009 the American company BOLD FORMULATORS LLC, dealing in
formulation of products for plant protection.
M.A. has been investing
in the Indian market as a source for potential manufacturing and marketing
capabilities.
M.A. launched a
new distribution subsidiary, with intention to recruit further 100 employees to
the distribution activities, on top of the Group’s 200 employees in India.
M.A. announced in
September 2009 on a strategic cooperation agreement with CIBUS GLOBAL,
according to which M.A. will invest up to US$ 37 million over five years in a
Joint Venture with CIBUS to develop proprietary crop traits in five major crops
with a European focus. Separately, in another agreement, M.A. has entered into
a Strategic Equity Alliance with CIBUS that allows M.A. to gradually acquire up
to 50.1% of CIBUS equity.
In October
In November
M.A. has a cooperation agreement with Swiss
partner FURMENISH for
development, manufacturing and marketing aroma products. The joint venture,
INNOVA AROMA S.A., established jointly in 2010 new company for the erection of
a production facility in M.A. Group compound in Ramat Hovav and called NEGEV
AROMA.
According to a
report from September 2011, the Israeli Investment Center is to approve an
investment of NIS 110 million for the erection of the plant.
In June 2011 M.A signed an
exclusive license agreement with Italian ISAGRO, for using the Italian
company's developed active substance.
After 4 years of preparations, in April 2011 subject started the
consumption of natural gas from EMG for its plant in Ramat Hovav. The plant will
consume 40 million cm of gas per annum for 5 years, in an estimated cost of US$
6 million per year, as part of a contract M.A. signed with Egyptian controlled
natural gas company EMG, which include also supply of gas to sister company
AGAN plant in Ashdod (for US$ 10 million per year). Subject invested NIS 30
million in the infrastructure. In parallel, subject also promotes the erection
of a private natural gas based power station (115MW) in its plant area, jointly
with EDELTECH and Turkish company ZORLO, with an estimated investment of US$
200 million.
SUMMARY
Good for trade engagements.
Maximum unsecured
credit recommended several € millions.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.48.82 |
|
UK Pound |
1 |
Rs.78.57 |
|
Euro |
1 |
Rs.69.29 |
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.