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Report Date : |
09.04.2014 |
IDENTIFICATION DETAILS
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Name : |
HAIFA BASIC OILS LTD |
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Registered Office : |
P.O. Box 4 Hahistadrut Blvd., Oil Refineries Compound Haifa Bay Industrial Zone Haifa 3100001 |
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Country : |
Israel |
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Financial as on : |
31.12.2013 |
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Date of Incorporation : |
13.01.1964 |
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Legal Form : |
Private Limited
Company |
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Line of Business : |
Manufacturers,
producers, exporters and marketers of basic oils, process oils, paraffin
waxes and wax additives |
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No. of Employees |
50 |
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 : |
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 – december 01, 2013
|
Country Name |
Previous Rating (30.09.2013) |
Current Rating (01.12.2013) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
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. 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 since 2011 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 Tamar field started meeting all of Israel's natural gas demand in 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. In May 2013 the Israeli government, in a politically difficult process, passed an austerity budget to reign in the deficit and restore confidence in the government’s fiscal position
|
Source
: CIA |
HAIFA BASIC OILS LTD.
(Known in short as HBO)
Telephone 972 4 878 86 37; 878 80 20
Fax 972
4 872 74 12
P.O. Box 4
Hahistadrut Blvd., Oil Refineries Compound Haifa Bay Industrial Zone HAIFA
3100001 ISRAEL
A private limited
company, incorporated as per file No. 52-002569-3 on the 13.01.1964.
Authorized share
capital NIS 700,600.00, divided into -
189,600,000 redeemable
preference shares,
6,186,400,000 ordinary
shares, all of NIS 0.0001 each,
fully issued.
Subject is fully owned
by OIL REFINERIES LTD. (ORL in short), a public limited company whose shares
are traded on the Tel Aviv Stock Exchange (TASE), controlled by:
1. ISRAEL CORPORATION LTD., 37.08%, a public company whose shares
are traded on TASE, controlled (some 52%) by
OFER Group, owned by the Ofer family and controlled by Idan Ofer (some
90%) and
2. ISRAEL PETROCHEMICAL ENTERPRISES
LTD. (IPE), 29.74% (of which 12.96% via fully owned PETROLEUM CAPITAL HOLDINGS
LTD. (PCH)), a public company whose shares are traded on TASE, controlled by
MODGAL INDUSTRIES (99) LTD. (60.9%, controlled by David Federman & family,
Jacob Gotenstein and Alex Pasal), ORL (subject, 12.3%) and KETER PLASTIC
LTD. (6.7%, owned by Segol family),
ORL became subject’s
sole owner on 09.03.2010 after during January – March 2010 it completed the
acquisition of the remaining shares, on top of the 50% it already held, from
the former shareholders, 3 petrol companies, according to a company value of
around NIS 254 million, as follows: In January PAZ OIL COMPANY LTD. sold 24.5%
for US$ 16.9 million. In February DELEK THE ISRAELI FUEL CORP. LTD. sold
11.5% for NIS 29.5 million.
In March 2010 SONOL
ISRAEL LTD. sold some 14% for NIS 35.6 million.
Aharon (Arik) Yaari, General
Manager, also of ORL,
Ronen Chitterer,
Deputy General Manager,
Ms. Margalit Fine,
Nir Adler,
Mrs. Einat Klein-Klech.
Manufacturers,
producers, exporters and marketers of basic oils, process oils, paraffin waxes
and wax additives (for the candles industry), etc.
Subject produces some
70,000 tons of products per annum.
Also providers of
laboratory services for oil and wax.
Subject is part of the
Petrochemical Division (Oils and Waxes segment) in ORL.
23% of oil sales and
50% of wax sales are for export.
Sales are to all
leading local fuel companies, mainly subject’s former shareholding partners and
their subsidiaries, including PAZ OIL, DELEK FUEL, SONOL ISRAEL) and to foreign
oil companies.
ORL is subject's main
supplier.
Operating from ORL's
owned compound premises (very long-term leased from the State), on an area of
1.6 million sq. meters, of which 43,000 sq. meters serves subject (which ORL
leases to subject), in Hahistadrut
Blvd., Oil Refineries Compound, Haifa Bay Industrial Zone, Haifa.
Having some 50
employees.
There are 1,502
employees serving ORL Group (had 1,524 in end of 2012).
Subject’s a/m shares
acquisition in 2010 by ORL was according to a company value of NIS 254.4
million for subject.
Assets and liabilities
attributed to the Oils & Waxes Segment of ORL Petrochemical Div.
(practically to subject) as of 31.12.2013:
Total assets US$ 55
million (current assets: US$ 34 million)
Total liabilities US$
17 million (current liabilities: US$ 16 million).
ORL current market
value US$ 945.4 million.
There are no charges
registered on the company's assets.
Financial data is
included in the consolidated B/S of parent company, OIL REFINERIES LTD., which
shows:
US$
(thousands)
31.12.2012 31.12.2013
ASSETS
Current assets
Cash and
cash equivalents 256,521 82,765
Customers 721,601 790,675
Other
debtors 88,727 69,073
Other current assets 51,705 56,085
Inventories 1,049,037
905,586
2,167,591 1,904,184
Non-current assets
Fixed assets, net 2,419,231 2,349,607
Loans & long-term
debts 83,374 81,312
Financial derivatives 103,596 70,226
Other non-current assets
173,854 122,990
2,780,055 2,624,135
4,947,646 4,528,319
LIABILITIES
Current liabilities 2,621,992 2,308,952
Non-current liabilities
Long-term liabilities for
banks 898,678 802,719
Debentures 518,879 543,881
Other non-current
liabilities 99,306 88,039
1,516,863 1,434,639
Equity 808,791
784,728
4,947,646 4,528,319
======== ========
In its 2013 annual financial statements, ORL's CPA noted that as of
31.12.2013 ORL Group and ORL itself
have deficit in working capital of US$ 405 million and
US$ 361 million,
respectively. As of
15.07.2013 ORL received a waiver from all the local banks regarding meeting its
financial covenants (which it failed to meet during previous periods) – see
below on a later waiver.
In mid July 2013 ORL
received its bonds holders' approval for providing
US$ 135 million as
collateral for CARMEL OLEFINS's debts, securing fund and interest payments till April 2015.
In October 2013 ORL received a waiver from the holders of the non-tradable bonds regarding meeting its financial covenants (which it
did not meet as of 30.09.2013).
In July 2013 ORL raised NIS 400 million in a private placement of bonds.
On the 19.12.2013 MA'ALOT raised ORL's bond rating to BBB (from BBB-),
leaving the "Credit Watch" status, following a successful raise of
NIS 319.7 million (~US$ 80 million), and issuing rights in volume of US$ 150
million, enabling ORL to meet its 2014 financial liabilities.
On the 01.12.2013 ORL received from its bank creditors, waivers, including new financial covenants, as
well debt re-arrangement and restructure agreements (conditioned the successful
a/m raise of US$ 80 million and rights issuing).
In December 2013 ORL raised NIS 528.4 million issuing
shares to the public, according to its arrangements with the banks and includes
shareholders investments (to keep their relative share).
As part of ORL’s strategic plan from November 2007, ORL erected a new facility for refined oil products with investment of US$ 530 million, which started operations in January 2013. For the sake of financing the move ORL signed for credit facilities, with a funding consortia headed by BANK HAPOALIM LTD. for credit line of US$ 600 million (no guarantees), and another US$ 300 million credit (for equipment purchase) from American EXIM jointly with other Export Credit Agencies in Europe.
OIL
REFINERIES LTD.
Consolidated Statement of Income
US$ (thousands)
For Year ended on 31.12
2011 2012 2013
Income 9,561,601 9,673,156 9,995,383
Gross profit 171,924 102,897 258,558
Operating profit (loss) 13,897 (90,505) 43,645
Loss before income tax (97,153) (263,939) (132,490)
Net loss (76,466) (198,448) (166,861)
========= ========= =========
ORL suffered in 2011/2 from the volatility in the global oil markets and decrease in refining margins, resulting in significant losses (as above).
Sales attributed to
the Oils & Waxes Segment of ORL Petrochemical Div. (practically to
subject):
2010 sales were US$ 80,363,000, making an
operating profit of US$ 7,605,000. Subject ended 2010 with a net profit of US$
8,918,000.
2011 sales were US$
102,781,000, making an operating profit of US$ 9,080,000. Subject ended 2011
with a net profit of US$ 6,918,000.
2012 sales were US$
91,344,000, making an operating loss of US$ 7,371,000. Subject ended
2012 with a net loss of US$ 7,064,000.
2013 sales were US$
68,592,000, making an operating loss of US$ 6,298,000. Subject ended
2013 with a net loss of US$ 7,290,000.
HABOL TRADE &
INSURANCE LTD., 100%, registered in Bermuda.
OIL REFINERIES LTD., dealing in
refining, production, trade, export and marketing of crude oil and its products
according to a franchise received to build, operate and maintain installations
and auxiliary plants for refining oils and minerals.
As of March 2012 (following a re-organization), ORL operates in 3
divisions/ sector: Fuels (ORL), Polyolfines (via CARMEL OLEFINS (polymers),
GADIV (aromatics) and Oils and Waxes (via subject). Main subsidiaries:
CARMEL OLEFINS LTD., 100%, manufacturers and marketers of raw materials for
the plastic and petrochemical
industries, also fully owns COLLAND
POLYMERS B.V., DUCOR
PETROCHEMICALS B.V., DUCOR MERSEYWEG B.V., DUCOR BOTLEK V.O.F. B.V., all of Holland,
COLINS LTD., Guernsey, CARMEL
OLEFINS (U.K.) LTD.
GADIV PETROCHEMICAL INDUSTRIES LTD., 100%, developers, manufacturers, exporters and marketers of a wide range of
petrochemical products, including aromatics, aliphatic solvents and
intermediates.
UNITED OIL EXPORT CO. LTD., 25%, ships refueling.
TANKER SERVICES LTD., 25%, operating leased tankers.
MERCURY AVIATION LTD., 31.25%.
O.R.L SHIPPING LTD., 100%.
GADOT BIOCHEMICAL INDUSTRIES LTD., 23.6%, biochemical acids and salts
manufacturing.
ORL TRADING LTD.,
ISRAEL CORPORATION
LTD., controlled by Ofer family, a public holding company. Current market value US$ 4,298.3
million.
ISRAEL PETROCHEMICAL ENTERPRISES LTD. (IPE), 12.3%, a holdings
publicly traded company (TASE, current market value US$ 7.2 million).
MODGAL INDUSTRIES (99)
LTD., a holding company, controlled (50.14%) by MODGAL LTD., equally owned by:
1) GIMA INVESTMENTS LTD., owned by Alex
Pasal (37.5%), Jacob Gottenstein (37.5%), Micha Lazar (12.5%) & Arieh Zilberberg (12.5%),
2) I.D. FEDERMAN HOLDINGS LTD., owned by
Adi Federman (51%), David Federman (32%) and Ms. Shelly Federman (17%).
The First
International Bank of Israel Ltd., Haifa Main Branch (No. 006), Haifa, account
No. 22411.
Bank Leumi Le’Israel Ltd., Haifa Main Branch (No. 876), Haifa, account
No. 450800/09.
A check with the Central
Banks' database did not reveal any negative information regarding subject's a/m
accounts.
There are several lawsuits against ORL, including environmental related
ones, though none of them seem to be significant. We did not find specific
claims against subject, per-se.
The continuing volatility in the global oil markets, and notably the
decrease in refining margins, continue to harm ORL Group, which lead to the
extensive losses – as described above (in 2012 ORL suffered its largest loss
since its privatization). ORL also suffered from the cease of supply of natural
gas (see below), though since April 2013, supply of natural gas resumed (from
the new reservoirs discovered in the Mediterranean Sea), which is expected to
improve the financial status significantly. On top of that, are the heavy costs
of the new manufacturing facility and its operation.
ORL launched a massive reorganization plan, which includes executive salary
cuts, early retirement plan, and an energetic efficiency plan. The Group also
has been taking measures designed to improve the financial position, including
reaching agreements with its bankers and bond holders as mentioned above. ORL's
banks disallowed it to pay dividends till end of 2013. Yet, Group's financial
status is still volatile and the negative economic environment and global
events in the energy and refinery sector continues to pose threats.
The latest capital raise and rights issuance is part of the recovery
scheme, designed to enable ORL to meet its 2014 liabilities, thus taking ORL's
bonds out of the "Credit Watch" status, and receiving bank approvals
for the debt arrangements and covenant restructure.
ORL is committed to an efficiency plan which will save it US$ 100 million.
The banks will also raise ORL's credit frameworks and the factoring
transactions in volume of US$ 200 million will be renewed.
Despite our efforts, we were unable to speak with subject's officials, as they were always unavailable. We left messages which so far remain unanswered.
Subject is part of ORL Group, which is considered to be the largest and leading in oil refinery and by-products in Israel.
Subject was declared a monopoly in its field by the Antitrust Authority in 1989.
Subject's production capacity is 70,000 tons of oils and waxes.
In October 2009 the Haifa District Court approved to file a lawsuit, filed
by ORL’s former partners in subject, 2 petrol companies DELEK and SONOL, on the
sum of NIS 165 million, against ORL, claiming it has acted not in the best of
subject. At the time ORL used to hold 50% in subject. ORL submitted an appeal
to the Supreme Court. No further data was found on that matter.
OFER Group and ISRAEL
CORP. are among the largest groups in the Israeli market. ISRAEL CORP. is Israel's largest holding
company, also controls mainly ISRAEL CHEMICALS LTD. (52%), a leading
global minerals concern, as well as local and global holdings in energy,
shipping and hi-tech companies (INKIA ENERGY LTD., TOWER SEMIC
Federman family, which
controls IPE, is a well-known wealthy family, and David Federman is a known
businessman with holdings in Israel and overseas, though the holding company I.D. FEDERMAN HOLDINGS LTD. is headed by his
son Adi Federman. Yet IPE, has
been facing financial difficulties in view of its prospected inability to pay
to its bonds holders, who lent them NIS 1.6 billion (bonds currently traded as
junk bonds), negotiations (also with its bankers) for debt arrangement are
underway, and a "Going Concern' note was attached to IPE's financial
statements since Q2-2012 (including 2013 annual financial statement).
On 30.12.2009 a transaction was finally completed where ORL acquired from IPE 50% in ORL’s 50% subsidiary CARMEL OLEFINS LTD., reaching 100%, in a share swap transaction: in return IPE was allocated 17.75% of ORL’s (new) shares valued of NIS 841 million. As part of the deal, ORL will sell its 12.3% stake in IPE, in consideration of US$ 40 million.
As part of ORL Group
process of transferring to natural gas usage, ORL received an approval of its
bank creditors in 2010 for an investment of US$ 70 million to erect several
facilities for the utilization of natural.
In May 2011 ORL signed
a deal for a supply of 1.2 BCM of natural gas with TETHYS SEA for the next 27
months, valued at NIS 1.2 billion. In November 2012 ORL signed an agreement for
gas supply from the "Tamar Group" for 5.8 BCM in volume of US$ 1.3
billion.
In May 2012 ORL signed
an agreement with the Palestinian Authority to supply 50% of Authority's oil
products for the next 2 years, in volume of NIS 1.9 billion per year.
In September 2012 ORL
reported it is checking the possibility of a full merger between ORL, CARMEL
OLEFINS and subject into ORL. The merger did not pull through.
On
one hand ORL has been losing in recent periods, facing financial challanges (as
described above), while prospects are still vague. On the other hand, ORL
managed to recently raise sufficient capital for its 2014 liabilities, and
reached a/m agreements with its bank and bonds creditors. Furthermore, ORL is a
pivotal industrial corporate in the local economy (supplies 60% of local fuel
demand to a "captured clients"), with known shareholders – and as
evidence, it has been successful in rising capital and reach agreements with
its creditors to-date. Therefore, we figure it is going to meet its commitment,
and subject is considered good for trade engagements, though it is hard
to evaluate credit frameworks; we see no problems in credits in relative small
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.59.95 |
|
|
1 |
Rs.99.36 |
|
Euro |
1 |
Rs.82.15 |
INFORMATION DETAILS
|
Analysis Done by
: |
DIV |
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Report Prepared
by : |
NIS |
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.