Daily Roundup / Teva loses appetite for Philly stake
The treasury sees a tax shortage, natural gas buoys BoI growth hopes, Isralom bonds leave the stock exchange, Better Place promises profits some day, port fixers win a pay raise and investors balk at Office Depot's demands.
No Philly hub for Teva: Teva Pharmaceutical Industries has spiked plans to build a distribution hub in Philadelphia, the Israeli pharma giant said on Tuesday. The center was going to be a monster, with 3 buildings totaling 100,000 square meters in area and 200 employees. But the company is restructuring its operations under Carlo di Notaristefani, head of Global Operations, aiming to save up to $2 million a year in operating costs. At a presentation to investors last week, di Notaristefani commented that Teva would be focusing on "cost-effective locations."
Treasury's tax forecasts darken: The Finance Ministry's macroeconomic forecasts for 2013 are growing bleaker. In fact, the projected misery starts now: the ministry is predicting that tax collection this year will fall NIS 3 billion short of forecasts, reaching NIS 221 billion. As for 2013, it sees tax revenues falling NIS 3 billion to NIS 5 billion short of the present forecast for the year. The upshot is that the budget cut in 2013 could mushroom from NIS 15 billion, which is onerous enough, to NIS 20 billion. The bottom line is that while taxes were jacked up during the third quarter of the year, it evidently wasn't by enough to cover the government's spending ambitions. Israelis had better brace for more tax hikes in 2013.
BoI expected to hike growth forecast: The Bank of Israel is widely expected to raise its growth forecasts, which the Finance Ministry did two days ago, to 3.5% for 2013 and 3.9% for 2014. At present the central bank's growth forecast for Israel is 3%. The treasury's forecast hike is based on fond anticipation that the hydrocarbons exploration companies will start producing natural gas from the bottom of the Mediterranean Sea during 2013. Various international bodies have also placed Israeli growth at 3% or less next year, but they didn't factor in the gas discoveries either.
Isralom to delist bonds: Controlling shareholders Matthew Bronfman and Shalom Fisher have agreed to personally guarantee Isralom's debts, which paved the way to an agreement with the real estate company's bondholders. Based on the agreement, Isralom bonds will be delisted from the Tel Aviv Stock Exchange: though institutional investors will continue to hold them, they will no longer be tradable on the exchange. Two weeks ago the twain rejected an Israel Securities Authority demand to disclose their personal wealth. Isralom owes its bondholders NIS 218 million.
Better Place sees profit in 2015: After two months of painful reorganization, electric-cars venture Better Place has presented a new business plan. CEO Evan Thornley, who succeeded company founder Shai Agassi at the helm, says spending will be tighter but declined to get specific on anticipated income. He did say that the company had learned it had to focus more on customer desires and decried the press' spotlight on the company rather than on its cars and the experience of driving electric cars. Oh well. In any case, Better Place intends to reach the black in 2015, until which time parent company Israel Corporation will continue to subsidize it.
Port workers get pay bump: Meanwhile, over in Ashdod Port, after six years of negotiations the restless maintenance workers – 140 out of the port's 1,300 employees – are about to get a nifty raise of NIS 4,000 a month (very roughly equivalent to $1,000 a month). The Ashdod Port board approved the outlines of agreement with the workers. The cost to the taxpayer will be NIS 9 million a year. Marking the agreement, the workers will cease their sanctions, which have lasted some six months and which have rather disrupted Israel's international trade. In fact the outlines of the agreement were reached seven months ago, but the final agreement never was signed because the Finance Ministry balked at two things: one a technicality regarding vacation days and the other an NIS 20,000 raise for one specific worker.
Office Depot talks fall apart: Office Depot Israel may be doomed after all, after minds at Bank Mizrahi-Tefahot and investors thinking of buying the staggering company failed to meet. The bank snarls that the investors are behaving frivolously and have yet to make any concrete moves and says it will sue for Office Depot's liquidation. A rep of the would-be investors says Mizrahi is insisting they inject NIS 30 million into Office Depot in cash and at that point, the talks fell apart. He also says they wouldn't pursue negotiations with Mizrahi brandishing threats. Office Depot owes Mizrahi NIS 30 million, banks in general NIS 66 million, suppliers NIS 80 million (say sources near the company) and its own workers NIS 20 million.
With reporting by Meirav Arlosoroff, Moti Bassok, Dror Raich, Daniel Schmil and Adi Dovrat-Meseritz