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Report Date : |
10.06.2013 |
IDENTIFICATION DETAILS
|
Name : |
SYNERGY CABLES LTD. |
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Formerly Known As : |
SUPERIOR CABLES LTD. ZION CABLES UNITED WORKS LTD |
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Registered Office : |
P.O. Box 102 (8701002) 1 Haeshel Street Sapirim Industrial Park Sderot
8710201 |
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Country : |
Israel |
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Financials (as on) : |
31.12.2012 |
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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 : |
262 |
RATING & COMMENTS
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MIRA’s Rating : |
B |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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Status : |
Moderate |
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Payment Behaviour : |
No Complaints |
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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, 2013
|
Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
|
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. Its
major imports include crude oil, grains, raw materials, and military equipment.
Cut diamonds, high-technology equipment, and pharmaceuticals are among 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. Israel''s economy also has weathered the
Arab Spring because strong trade ties outside the Middle East have insulated
the economy from spillover effects. 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, and production from the Tama field is expected to
meet all of Israel''s natural gas demand beginning mid-2013. 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 |
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 (8701002)
1 Haeshel Street
Sapirim Industrial Park
SDEROT 8710201 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 202,257,092 shares amounting to NIS 2,022,570.92 were issued.
1. ALPINE GROUP INC., of the
U.S.A., holding 47.9% (through fully owned SUPERIOR CABLES HOLDING (1997)
LTD.), controlled by ALPINE HOLDCO INC., controlled by Steven S. Elbaum,
2. 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.
Steven S. Elbaum, Chairman,
Dr. Hugo Chaufan, Vice Chairman,
Stewart Wahrsager,
Shaul Yamal,
Aviram Lahav,
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.
52.6% of power cables sales were for export in 2012 (60% 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., 30% of sales in 2012.
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 1 Haeshel Street, Sapirim Industrial Park, Sderot
(known as Shaar Hanegev Plant). Also operating from facilities as follows:
Additional 15,000 sq. meters storage facilities adjacent to Sderot
plant.
Rented offices, on an area of 65 sq. meters in 7 Hameyasdim Street,
Kiryat Bialik.
Rented offices, on an area of 50 sq. meters, 18 Lishansky Street, New
Industrial Zone, in Rishon Le-Zion,
Having 262 employees (had 280 employees in end of 2011).
The decrease is due to the sale of subsidiary PREMIER CABLES in June
2012.
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), brought to the lifting of the
"going concern" note from subject's 2011 annual statements, and since.
Current market value US$ 15 million.
Accrued orders of power cables as of 01.03.2013: NIS 72 million.
In February
There are 9 charges for unlimited amounts registered on the company's
assets (financial assets, fixed assets, equipment and a vehicle), in favor of
Bank Hapoalim Ltd., Mizrahi Tefahot Bank Ltd., The First International Bank of
Israel Ltd. and a computer company (last charge placed April 2012).
Consolidated B/S
shows:
NIS
(thousands)
31.12.2012 31.03.2013
ASSETS
Current assets:
Cash, cash equivalents 5,080 3,813
Other financial assets 3,431 3,865
Customers 91,547 87,734
Other debtors 7,123 8,697
Other assets 270 -
Stock 101,247 129,128
208,698 233,237
Non-current assets
Fixed assets 93,942 92,201
Other non-current
assets 3,044 2,913
96,986 95,114
305,684 328,351
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LIABILITIES
Current liabilities 137,596 163,066
Non-current liabilities 98,591 91,723
Equity 69,497 73,562
305,684 328,351
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Consolidated Statement
of Income NIS (thousands) Year ended 31.12
2010 2011 2012
Sales (from ongoing
operations) 547,773 592,608 626,688
Gross profit 64,615 75,133 85,844
Operating income 1,844 33,750 26,603
Profit (loss) before
taxes on income (39,554) 12,092 12,015
Net profit (loss) (43,948) 9,514 12,709
======== ======= =======
Consolidated sales for the first 3 months of 2013 were NIS 98,462,000
(44% decrease compared to the parallel period of 2012), making a gross profit
of
NIS 11,688,000, an operating profit of NIS 7,677,000 and a net profit of
NIS 3,059,000.
The decrease in sales is due to a decrease in sales to THE ISRAEL
ELECTRIC CORP. (a shift in delivery dates) and the sale of PREMIER CABLES.
SYNERGY CABLES GmbH (SCG), 100%, Germany, marketing company,
SYNERGY CABLES USA INC. (SCU), 100%, USA, marketing company,
SYNERGY CABLES CANADA INC. (SCC), 100%, Canada, 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., Ashdod Business Branch (No. 399), Ashdod.
As noted above, financial standing of subject was troublesome till couple
of years ago. The global and local economic climate in recent years also made
it harder for subject to recover. Nevertheless, re-organization moves
(including sales of no core activities and assets, layoffs, and subsidiary sale
– see more below) 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. Yet, 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 25% in low voltage cables in 2012 (was 30% in 2011),
and 65% in medium-high voltage cables in 2012 (was 75% in 2011).
The cables are manufactured according to world standards and all the
manufacturing facilities are ISO 9001/9002 approved.
In 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 OTC Stock
Exchange (symbol APNI:OTC US).
In July 2006 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 February 2013 EILUY sold its
holdings in subject.
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. In December 2012
subject and H.T. were ruled to pay NIS 12,351 (twelve thousand, three hundred
and fifty one NIS only). An appeal was made by plaintiff, though subject
estimates its chances are lower than 50%.
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.
In June 2012 (as part of subject's re-organization) subject sold its
holdings (80%) in PREMIER CABLES LTD., UK, marketing company, for £
3.7 million.
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 fell 11% in
2012 from 2011, reaching US$2,396 million, after rising by 12.6% in 2011
(continuing the growth trend from 2010 when it rose by 39% from 2009).
Export of Machinery & Equipment also marked 10% increase in 2012 (in
value of US$3,317 million), after around 8% yearly rise in both 2011 and 2010.
According to the Central Bureau of Statistics (CBS),
import of metals raw materials to the local industries in
2012 marked a decreasing trend, after a remarkable recovery in the years 2010
and 2011 from 2009 (a year where the local industry suffered from slow-down in
economy). Import of raw materials divided in 2012 as follows: Iron and Steel –
fell by 11.5%, reaching US$ 2,177 million (after rising by over 30% per year in
2010 and in 2011); Precious Metals – down 13% (after rising by 2% in 2011 and
22.5% in 2010) and reaching US$ 146 million; Non-ferrous Metals – fell by 13%
(after increase by 20% in 2011 and by 41% in 2010), reaching US$ 803 million.
Central Bureau of Statistics data reveals that investments by the local
manufacturing industries -both from import and domestic production- in
machinery & equipment (M&E) in 2012 fell by 1%, which comes after 41%
rise in 2011. The investments originating from import, which comprised 70% of
overall investment in M&E, fell 3.8% (after 69% rise in 2011), while
investment originating from local production rose by 6.2% in 2012 (fell 5.3% in
2011).
Gross Domestic Capital Formation (investment) in machinery &
other equipment in 2012 reached (in current
prices) NIS 47,540 million, of which NIS 33,336 million was from imports and
NIS 14,204 miilion from domestic production.
According to the Central Bureau of
Statistics, investments by the local industrial branch in imported
machinery and other equipment in 2012 witnessed almost 20% (in current prices)
decrease from 2011, after climbing by 108% in 2011 from 2010. The fall in 2012
in investment could be explained by the continuing unfavorable business
environment, which is also negatively affected by the slow-down in overseas markets.
Considering the significant improvement in subject's
financial situation, we figure subject is by now good for trade engagements and even for
credits. However, since thing are still fragile (also in view of the
unfavorable economic environment), therefore we recommend for relatively low
exposure. Follow-up is also recommended.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.56.74 |
|
|
1 |
Rs.88.53 |
|
Euro |
1 |
Rs.75.20 |
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 |
|
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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.