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Report Date : |
17.09.2014 |
IDENTIFICATION DETAILS
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Name : |
HI-TEX FOUNDED BY
TEFRON LTD. |
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Registered Office : |
P.O. Box 1364 &1365, |
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Country : |
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Date of Incorporation : |
1996 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Manufacturers, Marketers and Exporters of Seamless Intimate Apparel
and Active-Wear Products |
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No of Employees : |
922 |
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 |
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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 01, 2014
|
Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
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Low Risk |
A2 |
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Moderate Low Risk |
B1 |
|
Moderate Risk |
B2 |
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Moderate High Risk |
C1 |
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High Risk |
C2 |
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Very High Risk |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically
advanced market economy. Cut diamonds, high-technology equipment, and pharmaceuticals
are among the leading exports. Its major imports include crude oil, grains, raw
materials, and military equipment. Israel usually posts sizable trade deficits,
which are covered by tourism and other service exports, as well as significant
foreign investment inflows. Between 2004 and 2011, growth averaged nearly 5%
per year, led by exports. 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. 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. The economy has recovered
better than most advanced, comparably sized economies, but slowing demand
domestically and internationally, and a strong shekel, have reduced forecasts
for the next decade to the 3% level. Natural gas fields discovered off Israel's
coast since 2009 have brightened Israel's energy security outlook. The Tamar
and Leviathan fields were some of the world's largest offshore natural gas
finds this past decade. The massive Leviathan field is not due to come online
until 2018, but production from Tamar provided a one percentage point boost to
Israel's GDP in 2013 and is expected to contribute 0.5% growth in 2014. In
mid-2011, public protests arose around income inequality and rising housing and
commodity prices. Israel's income inequality and poverty rates are among the
highest of OECD countries and there is a broad perception among the public that
a small number of "tycoons" have a cartel-like grip over the major
parts of the economy. 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. Over the long term,
Israel faces structural issues, including low labor participation rates for its
fastest growing social segments - the ultra-orthodox and Arab-Israeli
communities. Also, Israel's progressive, globally competitive, knowledge-based
technology sector employs only 9% of the workforce, with the rest employed in
manufacturing and services - sectors which face downward wage pressures from
global competition.
|
Source
: CIA |
HI-TEX FOUNDED BY TEFRON LTD.
Telephone 972
4 990 00 00; 990 08 05
Fax 972 4 990 08 69
P.O. Box 1364 &1365
Misgav Industrial Park
Mobile Post Misgav
MISGAV 2017900 Israel
Originally established as a non-registered business in 1996.
Converted into a
private limited company and registered as such as per file
No. 51-248981-6 on
the 01.06.1997.
Authorized share capital NIS 250,000,000.00,
divided into -
250,000,000 ordinary shares of NIS 1.00 each,
of which
162,646,933 shares amounting to NIS 162,646,933.00 were issued.
Subject is fully
owned by TEFRON LTD., a public limited company whose shares are traded on the
Tel Aviv Stock Exchange (TASE), controlled by:
1. LITEF HOLDING INC, 23.52%,
2. MIVTACH
SHAMIR HOLDINGS LTD., 11.45%, publicly traded on TASE, controlled by Meir
Shamir,
3. INTIMES
NOUVELLE SEMLESS INC., 8.95%, both latter companies are owned by the Liberman family,
headed by Martin Liberman,
4. RIMON
INVESTMENT MASTER FUND L.P, 6.84%, controlled by Zvi Limon.
1. Gil Shimon, General Manager of subject and of
TEFRON,
2. Eliezer Parnafes, CFO of TEFRON.
Manufacturers, marketers and exporters of seamless intimate apparel and
active-wear products, as part of TEFRON Group.
Note: As of
01.01.2014, Seamless Division of TEFRON's sole Division.
98% of Group's
sales are for export, mainly to the USA.
Among clientele of
the Seamless Division in TEFRON: VICTORIA'S SECRET (44.3% of Group sales in
2013), CALVIN KLIEN, MARKS & SPENCER, ADIDAS, HANES, BRANDS INDUSTRIES,
T.J.MAX, WAL MART.
Operating from
leased premises, 2 plants on total area of 30,000 sq. meters, in Misgav Industrial
Park, Misgav. Also operating from offices at the TEFRON Group's headquarters
(leased, 178 sq. meters), in 94
Landlord of the
premises in Misgav Industrial Zone, Misgav: RIT1.
Having 922 employees in TEFRON Group as of end of 2013, of which 376
employees in Israel.
Due to accumulated
losses mainly in the light of the global economic crisis TEFRON Group
encountered financial difficulties. In December 2009 TEFRON's 3 bankers
announced on shutting all new credit frameworks, after TEFRON failed to meet
its financial covenants.
In January 2010
TEFRON reached an agreement with its bankers based on a new recovery plan
sought by its management, in which the banks will increase the line of credit
to US$ 30.8 million (of which US$ 1.8 million collateral of TEFRON’s
shareholders). In March 2010 TEFRON Group, signed the agreement with its
bankers, receiving a US$ 20 million loan, and further extension of credit by
US$ 9 million. In consideration, the banks (BANK LEUMI LE'ISRAEL LTD., BANK
HAPOALIM LTD. and ISRAEL DISCOUNT BANK LTD.) received options for circa 2.5% of
TEFRON. Also in March 2010, TEFRON raised US$ 4 million by issuing rights via
stock to its main shareholders.
In December 2010,
after the entrance of INTIMES NOUVELLE Group as investors (in total TEFRON
raised US$ 5.8 million), TEFRON reached a final agreement with its banks on its
financial covenants.
Group has been
ongoing an extensive re-organization and streamlining process.
In August 2012
TEFRON received a waiver from its 3 financing banks, regarding part of the
covenants for TEFRON and some of its subsidiaries (including TEFRON) for 2013,
and received further waivers in November 2012 (for 2013). In December 2013
TEFRON received further waivers, due to being close to the covenants
limitations. As of 31.12.2013, TEFRON meets its covenants.
In March 2014
subject and banks altered subject's covenants, and as of 30.06.2014 TEFRON
meets its covenants.
Group has been ongoing
an extensive re-organization and streamlining process.
In Q2-2014
financial statements TEFRON's CPA added a note that TEFRON's management
estimates that there is a possibility of over 50% that TEFRON will meet its
financial covenants.
Subject is an
“Approved Enterprises” and as such enjoys tax benefits and State incentives.
In September 1997 The Israeli Investment
Centre (IIC) approved an investment plan of US$ 20 million for subject's plant
expansion.
Later IIC approved
the investment of US$ 15 million in the expansion of the subject’s plant in
Misgav. In June 2001 yet another expansion plan was approved for the Misgav
plant by IIC, this time of US$ 33.5 million (US$ 6.5 million are grants).
Other financial data on subject not forthcoming.
Financial data is included in the consolidated B/S of parent company,
TEFRON LTD, which shows:
US$
(thousands)
31.12.2013 30.06.2014
ASSETS
Current assets
Cash
and cash equivalents 6,697 1,680
Short term investments 420 379
Costumers 13,691 18,284
Other
debtors 2,711 2,686
Inventories 12,622 11,923
36,141 34,952
Non-current assets
Property,
plant and equipment (net) 27,984 27,220
Intangible
assets, net 742 620
Other
non-current assets 5,709 5,984
34,435 33,824
70,576 68,776
======= =======
LIABILITIES
Current liabilities 24,246 23,978
Non-current liabilities 18,576 17,951
Equity 27,754 26,847
70,576 68,776
======= =======
TEFRON LTD.
current market value US$ 5.3 million.
There are 10
charges for unlimited amounts registered on the company's assets, in favor of
the State of Israel, Bank Leumi Le'Israel Ltd., Israel Discount Bank Ltd., Bank
Hapoalim Ltd. and companies (last charge placed November 2009).
Sales of TEFRON's Seamless Division:
2008 sales were US$ 86,265,000, making an
operating loss of US$ 15,804,000. Subject ended 2008 with a net loss
of US$ 16,641,000.
2009 sales were US$ 62,306,000, making an
operating loss of US$ 13,197,000. Subject ended 2009 with a net loss
of US$ 10,750,000.
2010 sales were US$
52,850,000, making an operating loss of US$ 16,278,000.
Subject ended 2010 with a net loss of US$
18,185,000.
2011 sales were US$
94,895,000, making an operating loss of US$ 2,862,000.
Subject ended 2011 with a net loss of US$
4,221,000.
2012 sales were US$
96,583,000, making an operating profit of US$ 1,786,000.
Subject ended 2012 with a net loss of US$
2,830,000.
2013 sales were US$
81,536,000, making an operating loss of US$ 2,024,000.
Subject ended 2013 with a net loss of US$
3,930,000.
Note: since TEFRON's sale of its
Swim ware activities (see more in CHARACTER), Seamless Division became TEFRON's main activity (its Cut& Saw activities are insignificant and
under 'Others' Segment, and is marginal)
TEFRON
LTD.
Consolidated
Statement of Income
US$
(thousands)
Year
ended 31.12
2011 2012 2013
Sales 118,418 98,963 82,912
Gross profit 18,122 17,031 14,826
Operating income
(loss)
(3,472) 2,028 (2,053)
Income before taxes on
income (loss)
(4,608) 403 (3,801)
Net income (loss)
(4,254) (458) (3,443)
======= ======= =======
TEFRON LTD.
consolidated revenues for the first 6 months of 2014 were
US$ 46,633,000 (5.4% increase compared to the
parallel period in 2013), making a gross profit of US$ 8,177,000, an operating loss
of US$ 417,000, and a net loss of US$ 977,000.
TEFRON LTD.,
parent company, heads TEFRON Group which, besides subject's activities also
operates as manufacturers, exporters and marketers of seamless woman’s lingerie
and under garments and active wear. Also fully owns:
MACRO CLOTHING
LTD., non-active – see more in
CHARACTER,
NEW NET INDUSTRIES
LTD., non-active,
TEFRON HOLDINGS
(98) LTD.
TEFRON UK LIMITED,
U.K., non-active,
TEFRON US HOLDINGS
INC.,
TEFRON USA INC.
(formerly ALBA), U.S.A.,
EL-MASIRA TEXTILE
COMPANY LTD., plant in Jordan.
Bank Hapoalim
Ltd., Bnei Brak Branch (No. 655), Bnei Brak, account No. 70666.
Israel Discount
Bank Ltd., Main Branch (No. 010), Tel Aviv, account No. 130915.
A check with the
Central Banks' database did not reveal anything detrimental on subject’s a/m
accounts.
Bank Leumi Le'Israel Ltd., Ayalon Business Branch (No. 693), Lod.
Besides the financial aspect of TEFRON Group, nothing unfavorable learned
on subject.
TEFRON was
negatively affected by the consequences of the global economic crisis and harsh
competition from Far Eastern markets. TEFRON Group encountered grave financial
difficulties and was on a verge of going bankruptcy in December 2009. Since
then TEFRON’s financial standing improved thanks to agreement with the banks
(including re-scheduling debts) and fueling capital by the shareholders and the
new investors (NOUVELLE), although situation is still fragile (as above MEANS).
Following the steps taken over the past couple of years, the Group's situation
improved, also due to the successful assimilation of NOUVELLE activities into
Group, which increased Group's clientele base.
As a result,
TEFRON Group has been on going through comprehensive re-organization and
structural steps, in which it closed plants, made massive workforce cuts and
other streamlining measures. TEFRON decreased its working force by 9% in 2011
(compared to 2010 – had 1,075).
As part of the Group's streamlining, it closed its offices in New York,
and transferred its activities to the Canadian office and to Israel.
In November 2013
TEFRON completed the sale of all activities, assets, goodwill etc. of MACRO
CLOTHING LTD. (designers, manufacturers, exporters and marketers of swimwear
and beachwear), and its Chinese and Hong Kong subsidiaries (TEFRON MACRO HK LTD
and DONG GUANG MACRO CLOTHING LIMITED) to GOTTEX SWIMWEAR for US$ 280,000.
Following this
move, the Seamless Division became TEFRON's
main activity (over 98% of 2013 activities)
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.
TEFRON is the 3rd
largest textile and apparel manufacturer in Israel.
Products are sold
by international name-brand marketers.
In 1997 parent
company, TEFRON LTD. published a prospectus offering shares to the public on
the New York Stock Exchange (symbol TFR), raising a sum of US$ 103 million,
indicating a value of US$ 233 million.
In December 2008
shares were deleted from trade after not meeting the NYSE listing criteria
shares and were transferred to the Over The Counter Bulletin Board (OTCBB), and
in December 2011 they were delisted from trade (TEFRON's shares are still traded
on the TASE).
MIVTACH SHAMIR
HOLDINGS LTD. entered as investors in TEFRON
in January 2006. It is the roof company to the MIVTACH SHAMIR Group, a
well-known and large holding group controlled (36%) by Meir Shamir (other main
investors are ASHTROM PROPERTIES – 9%, Leon Recanati – 8.5%). MIVTACH SHAMIR
has holdings in the industry (mainly 21% in TNUVA, local largest food concern),
hi-tech, venture capital, real estate and finance. It has current market value
of US$ 373 million.
Another investor
in subject is FIMI Fund, a leading local equity fund, which started investing
in TEFRON in 2005, reaching 27% at top. In May 2006 FIMI realized 9% of its
shares in TEFRON in
consideration of some NIS 100 million and later exited from TEFRON.
In 1999 TEFRON
acquired the U.S. textile manufacturer ALBA WALDENISIAN, in consideration of
US$ 62 million.
In May 2006 TEFRON
inaugurated a joint excellence and development center with NIKE in NIKE's
headquarters in the U.S.A.
As part of TEFRON
Group streamlining efforts, as of January 2009 subject assumed all Group’s
intimate apparel and active-wear activities (while MACRO handles all the
beach-wear activities). For that matter parent TEFRON transferred to subject
all the relevant assets and apart from that date all dealings with
clients and suppliers are with subject only.
In February 2009
TEFRON closed its dyeing plant in Netanya, Israel and transferred the work to
subcontractors), united plants in Jordan, increasing efficiency in plants, and
further lowering its workforce (and also pay reduction).
In June 2009
TEFRON announced that they are starting to sell their products in the local
market for the first time, as part of its efforts to confront the global crisis.
TEFRON will offer export surplus and market its own brand “tfr”. First
franchise store was opened in Kfar Saba and further franchised stores are
planned.
In January 2010
RIT1, TEFRON’s landlord in the headquarters building in Misgav, demanded for immediate
payments of rental fees, including opening legal procedures. The sides entered
negotiations and in March 2010 reached accord, where TEFRON will pay RIT1 NIS
3.4 million and evacuate the 7,700 sq. meters premises.
TEFRON acquired
the goodwill and list of clients of NOUVELLE SEAMLESS as part of the share acquisition finalized on 31.12.2010.
In 2011 TEFRON
started manufacturing (via subcontractors) seamless products in the Far East.
In January 2012,
TEFRON announced it signed a cooperation agreement with CIFRA S.P.A. of Italy,
among the world leasing seamless manufacturers, to develop, manufacture and
marketers of seamless sport, undergarments and bathing suits. In April 2014 the
cooperation agreement was terminated.
In April 2012 KAN
2000 TEXTILE INDUSTRIES filed a lawsuit against TEFRON claiming the defendant
owes them NIS 1 million for dyeing services. In June 2014 matter ended in
compromise in which TEFRON will pay NIS 463,000.
In September 2012
TEFRON signed an agreement with X-TECHNOLOGY SWISS RESEARCH & DEVELOPMENT
(XTS), to supply XTS manufacturing services and be their representatives.
In December 2013 it was reported that TEFRON established a
joint venture with BRANDIX LANKA od Sri Lanka for developing, manuifactuiring and marketing of apparel for
brands.
In
June 2014 TEFRAN signed a strategic agreement with CLOVER GROUP INTERNATIONAL
of Hong Kong which specilazed in seamless brassieres, to establish a joint
company in Honk Kong.
Sales by local Textile, Clothing and Fashion Industries have
been experiencing decrease in sales over the last years. Some 60% of the
textile industry production is sold in the local market and the rest for
export.
Most exports are the North American market, and the industries suffered from
the global economic crisis, mainly in the USA, as well as the slow-down in
local market.
Sales for export
by the Textiles, Wearing Apparel & Leather industries has been in a
decreasing trend over the last years: export fell by 6.6%, 6.7% and 5.3% in the
years 2011, 2012 and 2013, respectively (from the previous year), reaching US$
762 million in 2013. Export in the first 7 months of 2014 shows some recovery,
with sales for export rising by 12% from the parallel period in 2013.
Besides the
weakness of global markets, the local
industry has been in state of crisis in face of amounting import from foreign
competitors with cheaper production costs, forcing streamlining process, plants
closure, and mostly resulting in the shift of textile manufacturing to low
labor cost countries. There are around 14,000 employed in the textile sector in
some 130 plants. In order to deal with the situation, the local textile
industry diverted mainly to advanced technologies production, niches and design
aspects.
According to Central Bureau of Statistics (CBS) data,
investments in machinery & equipment from import for the manufacturing of
Textiles in 2013 fell 43.8% (in quantity terms) from 2012 and summed up to NIS
36.9 million (after 2.7% increase in 2012).
Although subject and Group are ongoing a
streamlining and its finance improvement, dealings are still recommended on
secured basis.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.61.10 |
|
|
1 |
Rs.99.05 |
|
Euro |
1 |
Rs.79.03 |
INFORMATION DETAILS
|
Analysis Done by
: |
DIV |
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Report Prepared
by : |
TPT |
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.