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Report Date : |
16.03.2013 |
IDENTIFICATION DETAILS
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Name : |
TAT TECHNOLOGIES LTD. |
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Formerly Known As : |
GALAGRAPH LTD. |
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Registered Office : |
P. O. Box. 80 Gedera (7075002) 2 Neta Blvd. Re'em Industrial Park Bnei Ayish 6086000 |
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Country : |
Israel |
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Financials (as on) : |
30.09.2012 Consolidated |
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Date of Incorporation : |
07.04.1985. |
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Legal Form : |
Public Limited Liability Company |
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Line of Business : |
Subject together with its subsidiaries, provides a variety of services and products to the commercial and military aerospace and defense industries and operates under four segments: |
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No. of Employees : |
180 |
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 : |
Slow but 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 – June 30th, 2012
|
Country Name |
Previous Rating (31.03.2011) |
Current Rating (30.06.2012) |
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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 |
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
TAT TECHNOLOGIES
LTD.
Telephone 972 8 862 85 00
Fax 972 8 862 15 11/00
P. O. Box. 80
Gedera (7075002)
2 Neta Blvd.
Re'em Industrial
Park
BNEI AYISH
6086000 ISRAEL
Originally
incorporated as a private limited company under the name of CRESTA LTD. and
registered as such as per file No. 51-106388-5 on the 07.04.1985.
On the 01.08.1985
name was changed to T.A.T. ADVANCED TECHNOLOGIES LTD., which changed to GALAXY
GRAPHICS LTD. on the 03.10.1985, then changed to GALAGRAPH LTD. on 07.08.1986,
and finally changed to the present name on 06.05.1992.
On the 3.11.1986
converted into a public limited liability company and registered as such as per
file No. 52-003579-1.
In March 1987, TAT
completed the initial public offering of its securities in the USA, and in June
1998 shares started trading on the NASDAQ. In August 2005 subject’s shares have
been traded also on the Tel Aviv Stock Exchange (TASE).
Authorized share
capital NIS 9,000,000.00, divided into -
10,000,000
ordinary shares of NIS 0.90 each,
of which 9,073,043
shares amounting to NIS 8,165,738.7 were issued.
1.
TAT INDUSTRIES LTD., 43.7%, a public limited
company shares traded on the Tel Aviv Stock Exchange (currently suspended),
controlled (79.3%) by ISAL AMLAT INVESTMENTS (1993) LTD. (itself holding
directly 10.3% of subject), also a public limited company traded on the Tel
Aviv Stock Exchange (currently suspended), controlled (82.7%) by KMN HOLDINGS
LTD., a public limited company whose shares are traded on the Tel Aviv Stock
Exchange (TASE), controlled (58.6%) by Roni Elroy and Giora Inbar (7.6%) (KMN
Group is also known and trading as KAMAN Group).
2.
LEAP-TIDE CAPITAL MANAGEMENT INC., 5.9%,
3.
Shares are also traded on the Nasdaq Stock Exchange
(Symbol:TATT) and the Tel Aviv Stock Exchange.
Note: regarding
the appointment of a Receiver for subject's shares held by parent companies,
see more in CHARACTER.
1. Rimon Ben-Shaoul, Chairman
2. Itsik Maaravi, General Manager
3. Paul Hall,
4. Shmuel Mendel,
5. Yaron Shalem,
6. Shlomi Karako,
7. Avi Shani,
8. Ms. Iris Shapira,
9. Jan Loeb,
10. Yankale Shahar,
11. Zeev birenboim.
Subject together
with its subsidiaries, provides a variety of services and products to the commercial
and military aerospace and defense industries and operates under four segments:
1. Original Equipment
Manufacturing (OEM) of Heat Management Solutions.
2. OEM of Electric Motion
Systems.
3. Heat Transfer Services and
Products.
4. Maintenance, Repair and
Overhaul or “MRO” services for aviation components.
In 2011, 55.6% of revenues are from product sales and 44.4% from
services.
Sales
are mainly to the Defense and Aerospace industries.
Among
clientele: ISRAEL AEROPSPACE INDUSTRIES, RAFAEL ADVANCED DEFENSE SYSTEMS, ELBIT
SYSTEMS, AERONAUTICS, SOLTAM (all in Israel), and RAYTHEON, PALL AEROPOWER,
IBM, GALILEO AVIONICA, Israel defense Force, US Army, German Armed Forces,
SINGAPORE TECHNOLOGY, Italian Ministry of Defense, KODAK, KOREAN AIR
INDUSTRIES, THALES, AIR FRACE, BELL HELICOPTER, THALES,etc.
Operating from
premises rented from its parent company on an area of circa 32,000 sq. meters,
in 2 Neta Blvd., Re'em Industrial Park, Bnei Ayish (near Gedera), and from
subsidiary locations in Kibbutz Bental (Israel), and USA..
Having some 180
employees in subject.
Having 610
employees in TAT TECHNOLOGIES Group, of which 310 in Israel.
Over the last years KMN Group went through a wide leveraged expansion strategy, including in
non-core activities, and was caught by the global economic crisis while highly
leveraged, with severe financial consequences. In their reviewes for KMN
HOLDINGS 2010 and 2011 annual statements, as well as
Q1/2/3-2012, KMN's CPA attached a 'going concern' note for KMN HOLDINGS.
The 'going concern' note was placed due to
several factors, including deficit in equity, deficit in working capital,
business results and negative cash flow, as well as not meeting certain of their
(KMN HOLDINGS and several subsidiaries, including TAT INDUSTRIES) obligations
for creditors (certain required financial covenant to their banks) and
liabilities for KMN's bonds holders.
Negotiations with the banks and bonds holders have been on-going for couple of
years, unsuccessfully.
On the 18.11.2012 the Tel Aviv District
Court ordered that a Receiver will be appointed to KMN HOLDINGS and several of
its subsidiaries as of 18.12.2012 (allowing KMN HOLDINGS to reach settlements
in this month period). According to reports from November 2012 KMN HOLDINGS
Group's debt stands on NIS 725 million debt by (of which NIS 507 million to
banks, NIS 140 million to bonds holders and the rest to other creditors).
In January 2013 it was reported an agreement
was reached in which KMN will cut 80% of debt to bond holders (NIS 15 million
on a debt of NIS 74 million), and become the sole shareholder, erasing KMN from
trade.
In October 2012
the Lod District Court granted the requests BANK HAPOALIM, a lender to TAT INDUSTRIES
LTD., and appointed a temporary receiver for the purpose of enforcing a lien
granted to BANK HAPOALIM on TAT INDUSTRIES' approximately 43% ownership
interest in subject, to secure TAT INDUSTRIES' NIS 46.87 million debt to the
bank.
Current market value
US$ 59.4 million.
There are 4 charges for unlimited amounts,
as well as 2 charges for the total sum of US$ 340,000 registered on the
company's assets (financial assets), in favor of Bank Leumi Le'Israel Ltd. and
Mizrahi Tefahot Bank Ltd. (last 2 charges placed January 2012).
Consolidated B/S
shows:
US$
(thousands)
30.09.2012 31.12.2011
ASSETS
Current assets
Cash and cash equivalents 15,250 26,232
Other financial assets 14,807 5,154
Accounts receivable 19,076 20,621
Other current assets 4,719 6,565
Inventories 33,835 31,303
87,687 89,875
Non-current assets
Fixed assets (net) 12,637 12,853
Other non-current assets 7,972 12,591
20,609 25,444
108,296 115,319
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LIABILITIES
Current
liabilities 17,517 16,824
Non-current
liabilities 6,288 9,333
Equity 84,491 89,162
108,296 115,319
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REVENUES
Consolidated
Statement of Income
US$
(thousands)
Year
ended 31.12
2011 2010 2009
Sales 85,397 79,755 83,091
Gross profit 13,415 15,067 16,196
Operating profit (loss) (1,590) (6,595) 1,218
Profits (loss) before taxes on income (1,730) (6,906) 1,367
Net profit (loss) (1,083) (7,263) 2,100
====== ====== =======
consolidated first 9 months of 2012 sales were US$
64,883,000 (4.6% increase compared to the parallel period in 2011), making a
gross profit of
US$ 16,080,000, an operating income of US$
3,366,000 and a net loss of US$ 1,910,000.
According to our:
Mizrahi Tefahot Bank Ltd., ramat Aviv Branch (No. 493), Tel Aviv.
Bank Leumi Le'Israel Ltd., branch data not
forthcoming.
BENTAL INDUSTRIES
LTD., 70%, developers, manufacturers, exporters
and marketers of motion systems for a wide range of military and civilian
applications (airborn, marine and land fields)
LIMCO-PIEDMONT
INC., 100%, which fully owns LIMCO AIREPAIR INC., heat transfer services and
products.
PIEDMONT AVIATION
COMPONENT SERVICES INC., Maintenance, Repair and Overhaul (MRO) services for
aviation components
TAT GAL INC. 100%,
purchasing agent for Group.
FIRST AVIATION
SERVICES INC., 30%, Dealing in maintenance and
repair of aerospace components.
The roof company
is KMN HOLDINGS LTD., a holding public company, with holdings in companies in the
trade, retail, industry, investment and real estate areas. Subject is part of
KMN Group Industrial Division,
headed by ISAL AMLAT INVESTMENTS (1993) LTD., 82.73%, a holding company,
current market value US$ 7.2 million. ISAL AMLAT also holds:
TAT
INDUSTRIES LTD., 79. 3%, a holding company, current market value
US$
6.5 million.
Trade Division, headed by KMN WATER LTD. (formerly KMN TRADE HOLDINGS (2007)
LTD.), which also holds:
KMN ENGINEERING
LTD., 100%, subject's parent company, holds the following:
TECHNO AD INDUSTRIES LTD., 100%,
KAMAN METALS TRADING LTD., 90.1%,
IKA LABORATORIES
(2006) LTD., 100%,
ISRAEL MENDELSON
TECHNICAL AND ENGINEERING SUPPLY - KAMAN (2005) LTD. (known as KMN MENDELSON), 47.6%, holds:
MENDELSON
– S. BAR LTD., 100%, importers and marketers of piping and allied accessories, for all sorts
of fluid conveyance,
ALEXANDROVITZ
ENGINEERING PLASTICS AND RUBBER - KMN (2005) LTD., 100%, importers, agents,
handling rubber and plastic semi-finished engineering products for the
high-tech, building and chemical industries.
ALEXANDROVITZ
PROJECTS LTD., 100%,
PALAD H.Y. INDUSTRIES LTD., 65%,
manufacturers and marketers of polyethylene and PVC piping for the
infrastructure,
HAMECHADESH
INDUSTRIES - KMN (2006) LTD., 100%, importers, marketers, manufacturers and
repairers of all sorts of pumps.
IML INDUSTRIES LLC, 100%, holds DODSON
GLOBAL INC., USA, 80%, steel pipes dealers.
KIDRON TRADE AND
AGENCIES LTD., importers, marketers and agents, supplying
inputs and raw materials to the aluminum industries
Metal Group:
KMN INDUSTRIES
(K.M.N) LTD., heads the Metal Group, also owns:
FINKELSTEIN METALS
LTD., 84%, manufacturers, marketers and exporters of bronze, brass and alloys
castings. Owns MAOF NON-FERROUS METALS LTD.
AVIGDOR INDUSTRIES
LTD., 80%, electronic casings as well as production of dies and product for
industry and metalwork.
HAGALIL INDUSTRIES
R.S. LTD., 100%, production and coating of metal cylinders for the industrial
sector, mainly hi-tech.
A.G.M TEFEN LTD.,
100%, metal working and electronic equipping.
NEW PHARM
DRUGSTORES LTD. 31.66%,
KAMIN REAL ESTATE
LTD. 50%.
KMN HOLDINGS also controls CELDON LABORATORIES (2000) LTD. (85%) and the publicly traded companies
KMN CAPITAL LTD. (80%) and 36% of TRENDLINE INFORMATION AND COMMUNICATION SERVICES LTD.
We did not find anything detrimental on subject itself, and all
financial/legal related troubles specified along this report relate to the
Group.
KMN Group, controlled by Roni Elroy, has been suffering from severe financial
difficulties, due to reasons mentioned above (MEANS). As part of the recovery plan, KMN Group decided to focus on core
activities (industrial companies), and sell the other holdings including trade
activities, including the sale of 52.4% of
KMN
MENDELSON for NIS 65 million + a NIS 15 million loan from
buyers, as well as merging the Group's metal activities that
include ISAL and its subsidiaries and TAT Group.
Subject is ISO
9001 certified.
In February 2000 subject
acquired the manufacturing and marketing activities, in the field of aircraft
accessories from its parent company TAT INDUSTRIES LTD., for the sum of US$
7,000,000.00.
Following this
subject’s parent became a holding company.
In
August 2008 subject compapleted the acquisition of 55% of BENTAL (done in
several stages) and became its controlling party.
Until the end of
2007, KMN made a massive move of acquisitions of 26 companies. (In 2005 Roni Elroy gaind control in KMN Holdings, and in 2007 KMN gained control in TAT
INDUSTRIES).
Roni Elroy is a
known business figure locally and is also the son-in-law of Itzhak Tshuva, one
of Israel’s leading businessmen, owner of DELEK GROUP. In fact, several months
ago Elroy was nominated as the chairman of DELEK REAL ESTATE LTD., one of
Tshuva's real estate arms, currently in a process towards a debt arrangement
with its bonds holders (after announcing it would not be able to meet its
obligations).
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$2,975.5 million), after 8% rise in 2010.
According to the Central
Bureau of Statistics (CBS), import of metals raw materials to
the local industries in 2012 marked a decreasing trend, after a remarkable
recovery in the years 2010 and 2011 from 2009 (a year where the local industry
suffered from slow-down in economy). Import of raw materials divided in 2012 as
follows: Iron and Steel – fell by 11.5%, reaching US$ 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.
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%).
Import of investment products - machinery
and equipment segment - for the local industry rose in 2012 by 2% from 2011,
reaching NIS 26,529.2 million (in $ currency terms, import fell by 5%).
Although subject itself
and its Group seem to be of good standing, considering the current financial
situation of KMN Group, dealings are recommended on secured basis.
Note: Since the beginning of February 2013
Israel Post has started using a new area code method of 7 digits (the old
method of 5 digits is no longer valid).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.54.16 |
|
|
1 |
Rs.81.74 |
|
Euro |
1 |
Rs.70.50 |
INFORMATION DETAILS
|
Report
Prepared by : |
PRL |
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.