After a year on the edge of oblivion, with an accountant's "going concern" warning over its head, Cementcal yesterday announced that the construction colossus Solel Boneh has bought a 10 percent stake in the debt-laden infrastructure company, and has an option on another 25 percent.

Solel Boneh paid a meager $125,000 for the stake it bought from Danny Brenner's Rio and Cosmos Construction Systems, but the real news lies in the idea that the Arison Investments controlled Solel Boneh (through Housing and Construction) has become a major shareholder in the company. Financial troubles aside, it has sales turnover and order backlogs of hundreds of millions of shekels and a finger in many construction projects nationwide.

The Solel Boneh deal is far from the end of the plan to rehabilitate Cementcal. In the next few days, Oz Atid International - or controlling shareholder Koby Ofek - will apparently take Moshe Shemesh's 20 percent stake in the company off his hands. Cementcal owes Oz, a foreign labor placement company, NIS 11 million.

Once both deals close, existing shareholders Moshe Frizinsky and Michael Talmor, along with Oz, will inject NIS 20 million into the company and Solel Boneh will fork out NIS 10 million. Chief financier Bank Hapoalim will provide another NIS 30 million in credit.

An agreement is also in the works with bondholders, to whom Cementcal owes NIS 67 million. Apparently Shemesh and Brenner opted to sell out, rather than participate in the life-sustaining infusion for the company.

Solel Boneh's 25-percent, two-year option is for shares held by the two largest stockholders, Frizinsky, who owns 26 percent, and Talmor, who acts as trustee for 15 percent. At NIS 1.06 per share, the company would shell out another $540,000 for the entire block.

In addition to announcing the sale, Cementcal also published its 2002 financial reports yesterday, which revealed that the company's financial state has worsened.

The company reported losing NIS 138.6 million - more than NIS 50 million in the fourth quarter alone. Cementcal posted a gross loss of NIS 64.3 million for the year against a gross profit of NIS 12.7 million for 2001.

The company attributed its huge gross loss to writing down the book value of investments and amending the estimates of works in process by NIS 30 million. It also took NIS 18 million in charges and foreclosed guarantees, mainly due to the Halom Rishon project, from which Africa Israel and Dankner Investments ousted Cementcal subsidiary Cementcal Karka.

For the year, Cementcal presented an operating loss of NIS 85.1 million, of which NIS 32.6 million was in the last quarter. For 2002, Cementcal posted charges of NIS 21.8 million for doubtful accounts.

Revenues also suffered, dropping 43 percent in 2002 to NIS 305 million, from NIS 532.8 million in 2001. The company's order backlog totaled NIS 311 million at year-end 2002, down 53 percent from its backlog at the end of 2001.

The tough year left Cementcal with an equity deficit of NIS 136.1 million, and a working capital hole of NIS 191 million.

Based on its sorry financial condition and the warning that its survival may be in question, Cementcal sees no improvement in the construction industry this year and will need further help from the banks to see it through the year.