IMI hiding going concern warning
In spite of improved sales and reduction of operational losses in 2007, IMI's financial condition is still dire.
Defense Ministry director general Pinhas Buchris is leading a floatation of 30% of the government-owned Israel Military Industries, as part of a renewed privatization effort, a move supported by the Finance Ministry, government sources say.
But the sources added that in spite of improved sales and reduction of operational losses in 2007, compared to 2006, IMI's financial condition is still dire. The firm, which is celebrating its 70th anniversary this week, is suffering from a severe cash crunch, and the company has yet to publish its 2003 financials because they cannot be signed without a going concern warning, an indication that the company is in peril of collapse without external support.
Without published financials for 2003, the IMI cannot obtain financing from banks or other private-sector sources. The sources say that the IMI is burdened with a total liability of NIS 3.4 billion, including an operating capital deficit of NIS 1.1 billion, and $195 million in overdue debts to suppliers.
Buchris proposes to privatize all of the IMI, including divisions originally slated for sale to another government industry when the privatization plan was originally drawn up, three years ago. (That privatization plan was never implemented.)
A spokesman for the IMI says that the company's business results have improved, and that it is "unaware of a going concern warning."