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Report Date : |
20.12.2012 |
IDENTIFICATION DETAILS
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Name : |
ISRAEL AEROPSPACE INDUSTRIES LTD. |
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Registered Office : |
Ben Gurion International Airport Lod 7010000 |
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Country : |
Israel |
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Financial as on: |
30.09.2012 |
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Date of Incorporation : |
1953 |
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Legal Form : |
Limited Shares Company |
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Line of Business : |
Subject is engaged in the development, manufacture, overhaul, repair, maintenance,
export and marketing of civilian and military aircrafts, medium-sized jets
and aerospace equipment, electronic and advanced technology systems, weapon
and armament systems, law enforcement, training and simulation systems, etc. |
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No. of Employees : |
16,679 |
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 |
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 30th, 2012
|
Country Name |
Previous Rating (31.03.2011) |
Current Rating (30.06.2012) |
|
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 |
israel - ECONOMIC OVERVIEW
Israel has a technologically advanced market economy. It depends on
imports of crude oil, grains, raw materials, and military equipment. Cut diamonds,
high-technology equipment, and agricultural products (fruits and vegetables)
are the leading exports. Israel usually posts sizable trade deficits, which are
covered by tourism and other service exports, as well as significant foreign
investment inflows. The global financial crisis of 2008-09 spurred a brief
recession in Israel, but the country entered the crisis with solid fundamentals
- following years of prudent fiscal policy and a resilient banking sector. The
economy has recovered better than most advanced, comparably sized economies. In
2010, Israel formally acceded to the OECD. Natural gasfields discovered off
Israel's coast during the past two years have brightened Israel's energy
security outlook. The Leviathan field was one of the world's largest offshore
natural gas finds this past decade. In mid-2011, public protests arose around
income inequality and rising housing and commodity prices. The government
formed committees to address some of the grievances but has maintained that it
will not engage in deficit spending to satisfy populist demands.
|
Source : CIA |
ISRAEL AEROPSPACE INDUSTRIES LTD.
(Known in short as IAI)
Telephone 972 3 935 31 11;
953 85 62; 953 34 35
Fax 972 3 935 42
67
E-mail: schami@iai.co.il
Ben Gurion
International Airport
LOD 7010000 ISRAEL
A government-owned company, incorporated as per file No. 52-002719-4 on
the 27.02.1966 (incorporation formation as a limited shares company), taking
over activities originally founded in
Originally registered under the name ISRAEL AIRCRAFT INDUSTRIES LTD.,
which changed to the present name on the 06.11.2006.
Bonds are traded on the Tel Aviv Stock Exchange since May 2007.
Note: Regarding the privatization process, see more in CHARACTER.
Authorized share capital NIS 2,600,000,001.00, divided into -
2,600,000,001 ordinary
shares of NIS 1.00 each,
of which 2,559,514,386 shares amounting to NIS 2,559,514,386.00 were
issued.
Subject is fully owned by the State of Israel, through the Ministry of
Defense (Minister in charge Ehud Barak).
1. Dov Baharav, Chairman,
2. Ms. Hava Shechter,
3. Ms. Rachel Dolev,
4. Ms. Orna Angel,
5. Mishael Vaknin,
6. Reuven Gerstel,
7. Amos Shapira,
8. Amal Asad,
9. Ms. Ofra Friedman,
10. Ms. Hana Muriel
Setteboun,
11. Roni Ikar.
Joseph Weiss.
Engaged in the development, manufacture, overhaul, repair, maintenance,
export and marketing of civilian and military aircrafts, medium-sized jets and
aerospace equipment, electronic and advanced technology systems, weapon and
armament systems, law enforcement, training and simulation systems, etc.
In 2011 some 72% of sales were to the military/ defense sectors (were
75% in 2010, 78% in 2009), the rest to the civilian sector.
Activities are
through 5 operating Groups:
BEDEK Aviation Group: one-stop shop for commercial aircraft conversion
into cargo airplanes (among customers: UPS), as well as maintenance services
for aviation companies, and the Israeli Air Force.
Civilian Aircraft Group: develop, engineer and manufacture of mid-size
business jets and perform works for major international OEMs, including aero
structure assemblies and systems, etc. The Group has a strategic cooperation
with GULFSTREAM of the USA, for the manufacturing of executive mid-size jets.
Among main plant in the Group is the Ramta Div.
Military Aircraft Group: Operating in front of the military clients in
Israel and all over the world and include development, manufacturing and
providing of manned and unmanned Aerial Vehicles (UAV) solutions. Also deal in the development of avionic systems and data channels for the
upgrading of combat aircrafts, training aircrafts and helicopters, delivering
maintenance and logistic services for world air forces.
As of January 2007, also manufacturing wires for
aircrafts and helicopters and operating as a main subcontractor in assemblies
manufacturing.
This Group also upgrades military aircrafts and manufactures unique
aviation parts, for instance for LOCKHEED MARTIN's F-16 aircraft. Among main
clients is the Israeli Air Force.
The Group includes the following Divisions: MLT Div, Magnet Div. and the
Lahav Div.
Missile Systems and Aerospace Group: development, manufacturing and marketing
of various sorts of missiles (including the "Arrow" Anti-Tactical
Ballistic Missiles and the "Barak" naval anti-ballistic missiles
system), as well as satellites, including communication satellites
("Amos" series) and observation satellites ("Ofeq" and
"Eros").
The Group includes the following Divisions: MLM Div., MBT Missiles Div.,
MBT Space Div., MBT Technologies Div. and TMM Div.
ELTA SYSTEMS LTD., subject's largest wholly-owned subsidiary,
developers, manufacturers, exporters and marketers of defense electronic
systems, specializing in radar systems, electronic warfare and communication, information
systems, homeland security, etc.
Local suppliers (among many others): TEKTEAM, TILTAN SYSTEMS
ENGINEERING, ELBE LEADING TECHNOLOGICAL SOLUTIONS, GRAND ENTERPRISES, NEXTEC
TECHNOLOGIES, SHAFIR PROD
Operating from a large complex of plots and buildings in the Ben Gurion
International Airport Compound (2,000,000 sq. meters, long-term lease from the
State), Lod. Also operating from plants in the Industrial Zones Yehud (MBT
& TMM Divs.), Beer Yaakov (MLM Div.), Beer Sheva (RAMTA Div.), Ashdod
(ELTA), Golan Heights (Golan Inds.) and Atarot. Total area used by subject is
3,500,000 sq. meters.
Subject also leases properties abroad.
There are 16,679 employees serving IAI Group as of end of 2011. Also
using additional some 2,000 employees abroad via subsidiaries. Had 15,303
employees IAI Group as of end of 2010.
In January 2011 the Minister of Finance approved
an IPO of subject in 2 stages. In May 2012 it was reported that it will be done
through 3 stages. According to the privatization plan subject is valued at US$ 3 billion –
US$ 3.5 billion.
In May 2007 subject published prospects offering its bonds for the
public via the Tel Aviv Stock Exchange TASE), raising a sum of approximately
NIS 1 billion.
In November 2009 subject raised NIS 450 million by issuing bonds via
TASE.
Accrued orders as of 30.09.2012: US$ 8,990 million.
There is 1 charge for the amount of US$ 94,500,000 registered on
company’s assets, in favor of Bank Leumi Le'Israel Ltd. (charge placed April
2012).
Consolidated B/S
shows:
US$
(millions)
31.12.2011 30.09.2012
ASSETS
Current assets
Cash and equivalents 983 263
Short term financial assets 636 1,1,08
Customers 444 369
Accounts receivable for
work-in-process, net 800 873
Other debtors and pre-paid expenses 303 355
Inventory and work-in-process, net 498 494
3,664 3,462
Non-current assets
Fixed assets, net 619 630
Intangible assets, net 106 103
Other non-current assets 216 206
941 939
4,605 4,401
====== ======
Current liabilities 3,337 3,142
Non-current
liabilities 440 397
Equity 828 862
4,605 4,401
====== ======
Consolidated Statement of
Income
Year
ended 31.12
US$
(millions)
2009 2010 2011
Revenues, net 2,881 3,148 3,436
Gross profit 436 455 518
Operating income 75 52 133
Profit before tax 84 100 100 100
Net income 61 94 83
====== ====== ======
Consolidated revenues for the first 9 months of 2012 were US$ 2,453 million (6% decrease compared to parallel
period of 2011), making a gross profit of
US$ 380 million, an operating profit of US$ 82 million, and a net profit
of
US$ 46 million.
IAI NORTH AMERICA INC., 100%, USA,
IAI ASIA PTE LTD., 100%, Singapore,
ELTA SYSTEMS LTD., 100%, whose subsidiaries include: DESARROLLO DE
TECNOLOGIAS Y SISTEMAS LIMITADA (50.01%, Chile), GAL – EL (MMIC) PARTERSHIP
(50%), DECOLINK WIRELESS LTD. (30%), ELBATECH LTD. (50%), OPTIGO SYSTEMS LTD.
(50%), HBL ELTA AVIONICS SYSTEMS PVT. LTD. (26%, India), LARDOSA INVESTMENT
B.V. (100%, Holland) SAFEX IMPORT AND EXPORT GMBH, 100%, Germany,
EAT - EUROPEAN ADVANCED TECHNOLOGIES S.A, 100%, Belgium,
MARDAN PTY LTD., 100%, Singapore, holds IAI DO BRASIL, 100% AND PSF
CONVERSION, 49.9%, Cyprus,
NOAMAR AIR HANDLING HOLDCO N.V, 40%, Holland,
IMAGE SAT INTERNATIONAL N.V. (ISI), 46.4%, Dutch Antilles,
BECONTREE HUNGARY KFT, 50%, Hungary,
AVIATION
ASTRA JET, 100%, USA,
EMPIRE AERO CENTER INC., 100%, USA,
STARK AEROSPACE INC., 100%, USA,
ISRAEL AIRCRAFT SERVICES INC, 100%, USA,
BIFC MANAGEMENT LTD., 50%, Cyprus,
PSF CONVERSIONS LLP, 50%, Cyprus,
ISRAELI UAV PARTNERSHIP, 50%,
TILTAN SYSTEMS ENGINEERING LTD., 35%,
BELGIUM ADVANCED TECHNOLOGIES S.A., 100%, Belgium.
G-NIUS UNMANNED GROUND SYSTEMS (UGS) LTD., 50%,
ISI CURAÇAO IN THE DUTCH ANTILLES, 46%.
Bank Hapoalim Ltd., Business Central Branch (No. 600), Tel Aviv.
Bank Leumi Le’Israel Ltd., Tel Aviv Central Branch (No. 800), Tel Aviv.
Israel Discount Bank Ltd., Tel Aviv Main Branch (No. 010), Tel Aviv.
Also working with other local branches of the above banks.
There have been legal claims against subsidiary
(46%) IMAGESAT INTERNATIONAL (ISI) and the other shareholder ELBIT (14%) by ISI
minority shareholders, regarding performance and operation of the company
(satellite services) during the recent years in which ISI turned down contracts
due to political motives. After one lawsuit was turned down in July by American
court, couple of other lawsuits followed later which claims damages of hundreds
US$ millions. Subject totally rejects the allegations. Matter is still pending.
In December 2007, subject reported that American
company AVIATION TECHNOLOGY GROUP INC (ATG), in which subject also holds 12.2%,
encountered financial difficulties. Subject has agreements with ATG, including
developing for ATG training jets, and its investments may be written-off.
Apart from the above, nothing unfavorable
learned.
In May 2001 subject sold its 50% subsidiary GALAXY AEROSPACE LTD.,
manufacturers and marketers of executive jets “Galaxy”, to GENERAL DYNAMICS
(GD) subsidiary GULFSTREAM, in consideration of US$ 365 million, and further
US$ 315 million, according to GALAXY performance till 2006. The cooperation
between subject and GULFSTREAM intensified and in mid 2008 subject commemorated
the delivery of 200 executive airplanes (G-200) in total value of US$ 4
billion.
In October 2008 subject announce a joint
development with GULFSTREAM of a new executive jet with advanced capabilities.
In 2002, subject’s subsidiary ELTA acquired from KOOR INDUSTRIES 30% of
ELISRA ELECTRONIC SYSTEMS LTD., based on a company value of US$ 330 million.
In March 2011 ELTA sold its shares (30%) in ELISRA to ELBIT SYSTEM for
US$ 67.5 million.
Major deals reported in 2005: won a US$ 500 million tender to provide
aviation parts to BOEING. Also, together with ELBIT SYSTEMS, won a US$ 183
million contract with the Turkish army.
Subject's main contracts during 2006 were with the R&D agency of the
Indian Ministry of Defense (D.R.D.D.) for the development of naval missile
"Barak 8", in volume of over US$ 300 million. Other contracts were
the supply UAV's to India (US$ 250 million) and to Australia (US$ 45 million.
In January 2007 subject and Japanese company MITSU & CO. signed an
agreement to establish a joint venture, to be called M&B CONVERSIONS LTD.,
for converting Boeing passenger airplanes type 767-300 into a cargo airplane.
The cargo airplanes market has been growing fast in the recent years and
subject operates via its BEDEK Division in this market.
In July 2007 subject signed a long term cooperation agreement with
German RHEINMETAL, for the development of advanced intelligence combat systems.
In May 2008, subject signed of an agreement with Indian TATA
Concern for cooperation, designed to develop and manufacture defense and
aviation equipment and systems. A joint new company was established called
TASL, subject’s share 26%, and subject’s Board approved initial investment of
up to US$ 50 million. TASL would be the platform for vast operation with Indian
government. In late 2010 it was reported that TATA also entered with subject
(via subsidiary ELTA) in another joint venture for radar manufacturing.
Indeed, in March 2009 subject announced a huge deal with the Indian Army
in value of US$ 1.4 billion, where subject will develop ground and naval
defensive missile systems.
There were recent reports on other major deals with the Indian
government worth over US$ 2 billion, including intelligence aircrafts,
missiles, UAVs and radar systems.
In June 2008, subject signed an agreement with
SYNERGY GROUP CORP., a leading corporate in South America in the aviation,
energy and shipyard fields, to establish a joint company, which will develop a
wide range of products in the security and aviation areas, as well as supply
services for commercial airlines.
Among deals reported in recent years:
An overall service agreement with local Ministry of Defense, for period
of 9.5 years, designed to serve the Air Force heavy transportation aircrafts, a
deal volume may reach US$ 170 million; A US$ 100 million
10 years contract for upgrade and maintenance for KENYA AIRWAYS jet engines (by
BEDEK Div.); Aircraft conversion into cargo airplanes for AIR TRANSPORT SERVICE GROUP
subsidiary CARGO in volume of US$ 100 million; Upgrade F16 jets for
foreign armies (Morocco, Poland & Romania) in value of US$ 100 million; In
the framework of subject’s cooperation with Japanese MITSUI, initial US$ 15
million supply contract signed; Subsidiary ELTA won jointly with ELBIT SYSTEMS
EL-OP a US$ 141 million contract (of which US$ 54 million for ELTA) to supply
combined airborne imagery intelligence systems to the Turkish Air Force; Sale
of fuelling jets to Colombian Army for US$ 60 million.
In May 2010 subject sold EUROCOM Group all its shares (20.5%) in SPACE
COMMUNICATION LTD. (SPACECOM), marketers of satellite services from the Israeli
Satellite “Amos” (developed and manufactured by subject), for NIS 167.325
million. In June 2012 SPACECOM announced decided to acquire "Amos 6"
satellite from subject, expected to be launched in 2015 1stQ (and remain in
space at least 16 years), in a deal volume valued at US$ 195 million.
In summer 2010 it was reported that subsidiary ELTA will sell radar
systems to clients in Asia in total volume of US$ 33 million, air defense
radars to a client in Asia for US$ 57 million and communication systems to
foreign clients in volume of US$ 55 million. Another major deal was reported
with India in estimated value of US$ 500 million (part of the transactions in
India mentioned above).
In recent years subject signed and delivered
several major contracts for supply of UAVs to foreign armies. In 2008 it had a
contract jointly with Canadian partner MDA for supply of UAVs to Canadian Army
in value of US$ 80 million (with potential for extension); In mid 2010 subject
signed a continuous deal with the Australian Army in volume if tens of US$
millions (also with MDA). Other deals: sale of UAVs systems to the Russian
company OPK OBORNPROM in volume of US$ 400 million (in 3 years). A report in
mid 2010 mentioned a coming deal to supply Brazilian forces with 12 UAVs
(Brazilian Police already acquired couple of UAVs in the past), designed
towards the 2014 World Cup games and 2016 Olympic Games in the country, in a
deal which could reach US$ 400 million.
During 2011, subject has entered the 'Ground Warfare" Sector, as
part of a reorganization to compensate for the losses of the Civilian Aircraft
sector. Also, in June 2011 subject reported it will develop, construct and
erect 2 wind turbine power stations (together with a foreign company),
producing 3mW each, with an investment of € 43 million.
In June 2011 it was reported that subject and AIRBUS MILITARY will develop
an aircraft for intelligence, detection and areal control.
In January 2012 subject announced on its largest ever deal (in 2 stages,
to be spread over 4 years) to supply systems and equipment to an Asian client
in total volume of US$ 1.6 billion.
In February 2012 it was reported that subsidiary ELTA will supply
advanced radar systems to an Asian country for US$ 150 million.
In March 2012 it was reported ELTA won 3 contracts in total volume of
US$ 76 million for supply of radar systems and satellite communications
systems.
In May 2012 it was reported on the renewal in process of subject's
privatization, now to be handled in 3 stages, in which the first stage will
include an IPO of some 30%, and then additional 2 share offerings. The state is
estimated to hold some 30% of subject in the end. This plan is under the
restriction of any shareholder to hold more than 5% and no controlling body.
In July 2012 it was reported that subject sees a good forecast for its
newly developed civil aircraft towing system developed with AIRBUS and
LUFTHANSA.
In September 2012 it was reported that subject, together with ELBIT
SYSTEMS, will supply the Israeli Ministry of Defense services for the new
training aircrafts in volume of US$ 603 million (subject's share US$ 183
million).
Israel is considered one of the largest exporters of military and
defense equipment in the world. Israel military and defense industries sales in
2010 rose 3% from 2009 to US$ 9.6 billion, of which US$ 7.2 billion for export
(comparing to US$ 6.9 billion in 2009). The U.S.A. is the largest market for
the military and defense industries' export, followed by India. Further US$ 1
billion are exported in broader defense systems.
Sales by the 4 largest local defense industries (subject, ELBIT, RAFAEL
and IMI) comprised some 85% of overall sales.
Good for trade engagements and all
credits.
Notes:
1. P. O. Box 75 belongs to
the Taman Division in Yahud
2. Since the beginning of
2012 Israel Post started using a new area code method of 7 digits (the old
method of 5 digits will still be valid till end of 2012).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.54.73 |
|
|
1 |
Rs.89.02 |
|
Euro |
1 |
Rs.72.48 |
INFORMATION DETAILS
|
Report
Prepared by : |
SDA |
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.