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Report Date : |
02.05.2012 |
IDENTIFICATION DETAILS
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Name : |
SYNERGY CABLES LTD. |
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Formerly Known As : |
SUPERIOR CABLES LTD |
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Registered Office : |
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Country : |
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Financials (as on) : |
31.12.2011 |
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Date of Incorporation : |
10.07.1963 |
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Legal Form : |
Public Limited Liability Company |
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Line of Business : |
Manufacturers, marketers and exporters of power and
electrical cables, ranging from low (LV), medium (MV) and high voltage (HV)
power cables up to 161 kV; control, airfield lightning, EMC and industrial
cables |
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No. of Employees : |
280 |
RATING & COMMENTS
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MIRA’s Rating : |
Ca |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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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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Status : |
Moderate |
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Payment Behaviour : |
Unknown |
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Litigation : |
--- |
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, 2012
|
Country Name |
Previous Rating (31.12.2011) |
Current Rating (31.03.2012) |
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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 |
SYNERGY CABLES LTD.
Telephone 972 8 680 94 44
Fax 972 8 689 00 14
E-mail: synergy@synergy-cables.com
P.O. Box 102
Sapirim Industrial Park
SDEROT 8701002 ISRAEL
A public limited liability company, incorporated as per file No.
52-002527-1 on the 10.07.1963.
Originally registered under the name ZION CABLES UNITED WORKS LTD.,
which changed to SUPERIOR CABLES LTD. on 24.01.1999, and then changed to the
present one on 23.04.2007.
In 1998, all
activities of CVALIM – THE ELECTRIC WIRE AND CABLE COMPANY OF ISRAEL LTD., a
rival company founded in 1934 and operated in the same line as subject, were
acquired in consideration of US$ 43.5 million and merged it into subject.
Authorized share capital NIS 40,000,000.00, divided into -
4,000,000,000 ordinary shares
of NIS 0.01 each,
of which
187,000,836 shares amounting to NIS 1,870,008.36 were issued.
1. ALPINE
GROUP INC., of the U.S.A., holding 51.8% through ALPINE HOLDCO INC. and
SUPERIOR CABLES HOLDING (1997) LTD.,
2. EILUY
FINANCY LTD. (formerly S.R. ACCORD TECHNOLOGIES LTD., formerly SFK TECHNOLOGIES
LTD.), 12.9%, publicly traded on the Tel Aviv Stock Exchange, controlled by
Dror Atzmon and Yaron Yeiny,
3. MENORA
MIVTACHIM HOLDINGS LTD., 5.45%, institutional investor,
4. Shares
are also traded on the Tel Aviv Stock Exchange.
In September 2002,
former parent SUPERIOR TELECOMMUNICATIONS INC. (U.S.) signed an agreement to
sell several assets and holdings, including its shares in subject, to the
ALPINE GROUP INC. (which owns 49% of SUPERIOR TELECOMMUNICATIONS INC.) for a
sum of US$ 85 million. The deal was finalized on the 12.12.2002.
1.
Steven S. Elbaum, Chairman,
2.
Dr. Hugo Chaufan, Vice Chairman,
3.
Stewart Wahrsager,
4.
Shaul Yamal,
5.
Aviram Lahav,
6.
Prof. Leora Kazenstein.
Meir Yalon.
Manufacturers, marketers and exporters of power and electrical cables, ranging from low (LV), medium (MV) and high voltage (HV) power cables up to 161 kV; control, airfield lightning, EMC and industrial cables.
60% of power
cables sales were for export in 2011 (55% in 2010), mainly to U.K. USA and
Germany.
Until the end of
the first half of 2008, manufacturing was divided into 2 divisions:
Telecommunications and Power, when by June 2008 the Telecommunications Div.
activity was sold to the TELDOR Group (see more below).
Main client is THE
ISRAEL ELECTRIC CORP., 28% of sales in 2010.
Purchasing of
copper is via affiliate EXEON INC. (subsidiary of ALPINE).
Aluminum supplier:
RUSAL.
Amongst local suppliers: Y.T.S. YOGEV TRADING SERVICES
Operating from
premises, an owned plant, 60,000 sq. meters, on which 34,000 sq. meters built
in Sapirim Industrial Park, Sderot (known as Shaar Hanegev Plant), to where
they moved their headquarters from 7 Hameyasdim Street, Kiryat Bialik, though
still hold offices at that address – leased 65 sq. meters. Also operating from facilities
as follows:
1.
Additional 15,000 sq. meters storage facilities
adjacent to Sderot plant.
2.
Rented offices, on an area of 266 sq. meters, 18
Lishansky Street, New Industrial Zone, in Rishon Le-Zion,
3.
Offices and facilities, leased, in the UK.
Having 280
employees (had 253 employees in end of 2010).
In their Reviews for subject’s financial statements for 2010 and 2011
quarterly reports (last is on 30.09.2011) the CPA attached a "going
concern" note for subject, due to accumulated losses in the years 2008-2010
(total NIS 181.6 million) and uncertainty as to the continuing profitability
trend that subject reached in 1st half of 2011 (net profit of NIS
9.6 million, though after deducting capital gain from selling an asset it
reaches net loss of NIS 2.3 million), as well as doubts as to the company's
ability to meet its financial covenants towards its bankers (since December
2008). In August 2010 subject finalized debt arrangement with its bonds
holders, including change in interest rates and reschedule (postponement) of
bonds redemption in sum of NIS 160 million to 2017 (instead of 2013), and other
obligations.
ALPINE also fueled NIS 7.5 million into subject in a convertible loan.
Subject committed to a wide re-organization move, completed during 2011
first half, which included streamlining measures and dismissals, real estate
asset realization (sold – see below CHARACTER) and shift in headquarters.
In March 2012 new financial covenants were agreed with subject's banks.
That, together the success of the re-organization and the significant lowering
of subject debts to the banks (NIS 20.3 million on the 31.12.2011 compared to
NIS 48.5 million on the 31.12.2009), have lifted the "going concern"
note from subject's 2011 annual report.
Current market
value US$ 4.1 million.
Accrued orders of power cables as of 01.03.2012: NIS 141 million.
In February
There are 13
charges for unlimited amounts registered on the company's assets, in favor of
local banks (financial assets and fixed assets) and a computer company (last
charge placed March 2012).
Consolidated B/S shows:
NIS
(thousands)
31.12.2010 31.12.2011
ASSETS
Current assets:
Cash, cash equivalents 2,522 3,663
Other financial assets 4,748 4,229
Current maturities on loans to
main customer 18,955 5,128
Customers 100,359 103,405
Other debtors 7,544 7,907
Stock 91,890 121,311
226,018 245,643
Non-current assets
Fixed assets 112,345 105,948
Other non-current assets 13,484 1,011
125,829 106,959
351,847 352,602
=======
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LIABILITIES
Current liabilities 177,785 176,962
Non-current liabilities 136,077 119,930
Equity 37,985 55,710
351,847 352,602
=======
=======
Consolidated
Statement of Income
NIS
(thousands)
Year
ended 31.12
2009 2010 2011
Sales (from ongoing
operations) 536,836 547,773 592,608
Gross profit 51,232 64,615 75,133
Operating income
(loss)
(22,271) 1,844 33,750
Profit (loss) before
taxes on income
(44,155) (39,554) 12,092
Net profit (loss)
(45,742) (43,948) 9,514
======== ======= =======
SYNERGY CABLES
GmbH (SCG), 100%, Germany, marketing company,
SYNERGY CABLES
USA INC. (SCU), 100%, USA, marketing company,
PREMIER CABLES
LTD., 80%, UK, marketing company,
EILAT OPTIC CABLES
LTD., CABLES OF ZION UNITED MARKETING COMPANY LTD., H.T. CABLE LTD., all 100%,
all non-active.
· Bank Hapoalim Ltd., Haifa Main Branch (No. 700), Haifa.
The
First International Bank Ltd., Haifa Main Branch (No. 006), Haifa.
As noted above,
financial standing of subject is was troublesome.
The global and
local economic climate in recent years also made it harder for subject to
recover. Nevertheless, re-organization moves and arrangements with its bond
holders and bankers, as well as recovery in the markets (included increase in
orders from local Electricity Corp.) improved subject's conditions. In
addition, the local and global economic environment has been worsening again in
recent period.
In the legal
aspect, nothing unfavorable learned apart from relatively minor case (see more
below).
Subject is a
leading company in the power cables field in Israel, with estimated market
share of 30% in low voltage cables in 2011 (was 25% in 2010), and 75% in
medium-high voltage cables in 2011 (was 45% in 2009).
The cables are
manufactured according to world standards and all the manufacturing facilities
are ISO 9001/9002 approved.
In September 1999,
subject acquired the activities of its local competitor in the electrical
cables industry, PICA PLAST LTD., in consideration of US$ 9.7 million.
ALPINE GROUP INC.
is an industrial holding company in the metal and wires business. It is a
public company whose shares are traded on the NASDAQ Stock Exchange Pink Sheets
(symbol APNI).
In July 2006 the SHREM FUDIM GROUP, through its investment arm SFK
TECHNOLOGIES, and partners invested in subject in return of 30% of its shares.
Shares were held by ART P.E. LIMITED PARTNERSHIP, a private equity investment
fund. SFK TECHNOLOGIES LTD. (SFT), a publicly traded (TASE) investment company.
Until December 2010 it SFT held 44% of ART as a limited partner and 50% as
general partner.
In September 2009
SFT signed agreements with its partners in ART (including Ofer Yarkoni and
Doron Steiger) to dismantle ART during 2010 and realize the investment of ART in
subject. In December 2010 ART divided its holdings in subject between its
partners – 13% left to S.R. ACCORD TECHNOLOGIES LTD. (formerly SFK TECHNOLOGIES
LTD., no EILUY FINANCY LTD.), who holds the shares in subject. EILUY FINANCY
later sold all its activities (investments) and is currently a public shell
company.
In 2003, subject
signed a deal to acquire 34% of a company in Kazakhstan. In April 2004, the
deal was replaced with a new one, according to which subject will provide
equipment for 22% of KAZENERGOKABEL shares and for US$ 900,000.
In December 2010
subject sold its holdings (22%) in the Kazakh company for US$ 2 million.
In that regard,
subject has been in legal process from 2006 concerning a claim against subject
for fees by a law office in Kazakhstan. Subject estimate chances to win higher
than losing but made proper deduction in its books.
In June 2008
subject finalized a transaction with local telecommunications, electronics and electricity cables manufacturer
TELDOR WIRES AND CABLES LTD., selling to TELDOR subject's Telecommunication
Cables Division for NIS 50.2 million, net (activity value was NIS 75 million,
from which debt of subject to TELDOR was erased). The sold division sales in
2007 comprised some 20% of subject's sales. The move was part of the company's
strategic plan to focus on its core activities. As part of the deal subject
will cease the marketing activities of SYNERGY CABLES GmbH in Germany.
In December 2010
subject realized its holdings (37.5%) in a real estate in Rishon Le-Zion for
NIS 20.5 million, money designed to redeem short-term bank loans.
According
to data by of the Metal, Electrical and Infrastructure Industries Association,
representing the local Metal and Electricity Industries, which includes large
scale export-oriented industries on one hand and family-owned plants which sell
to the local market: 2010 sales (local and export) by the said industries
amounted to NIS 70 billion, comprising 25% of Israel's industrial output.
Results are similar to 2008 scales, after some 20% drop in 2009 due to the
significant slow-down in the local economy, affected by the global financial
and economic crisis. Sales for export reached US$ 10 billion in 2010.
Some 90,000
employees serve the said industries (26% of Israel's industrial workforce).
Export of products
of Basic Metals by the local industry rose in 2011 by 12.6% from 2010, reaching
US$2,678.7 million, continuing the growth trend in 2010 when it rose by 39.2%
from 2009. Export of Machinery & Equipment also marked 8.3% increase in
2011 (in value of US$2,975.5 million), after 8% rise in 2010.
According
to the Central Bureau of Statistics (CBS), import of metals raw
materials to the local industries in 2010 and 2011 showed an increasing trend,
after a contraction in
Despite the current general weakness in
local markets (negatively affected by the global economy), 2011 ended with
significantly improved economic indicators compared to 2010 in terms of gross
domestic investment in machinery and other equipment for the manufacturing
industry (excl. ships & aircrafts). Central
Bureau of Statistics data reveals that investments -both from import and
domestic production- of machinery & equipment rose by over 35% from 2010
(in 2010 it rose by some 10% from 2009, after it fell by 19% from 2008). Total
gross domestic investment in machinery & equipment from import alone, rose
in 2011 by 52% from 2010 (12% rise in 2010 after falling in 2009 by almost
23%).
Although subject's financial situation has impoved
significantly, for the time being dealings are recommended on a secured basis.
Notes:
1. P.O. Box 400 is an old one,
that does not serve subject anymore.
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.52.68 |
|
UK Pound |
1 |
Rs.85.12 |
|
Euro |
1 |
Rs.69.38 |
INFORMATION DETAILS
|
Report Prepared
by : |
MNL |
RATING EXPLANATIONS
|
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 |
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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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.