State sues ICL for unpaid royalties
Claims Dead Sea Works owes $291 million, company denies all.
The Finance Ministry has sued Israel Chemicals subsidiary Dead Sea Works, claiming it owes $291 million in government royalties, including interest and index-linkage.
The lawsuit was filed as part of an arbitration process with the treasury's accountant general.
The suit covers royalty payments the state claims have been in arrears since 2000, according to rates set by the 1961 Dead Sea Concession Law. The treasury says DSW didn't provide the government with all the information necessary for calculating the exact amount of its claim, and therefore filed its suit based on an estimate.
This is part of the government's policy of realizing its rights over state assets, including through civil court action.
In the arbitration process, the government also is demanding the royalty rate on potash and magnesium sales be raised from 5% to 10% for quantities exceeding 3 million tons a year, starting from 2010.
The arbitrator on behalf of the government is attorney Alex Hartman, with attorney Ram Caspi representing DSW. Together they are required to choose a third arbitrator.
ICL denies owing the government royalties, stating that all royalty calculations throughout the years were performed as required by law.
The suit is being handled for the state through the Claims and Outsourcing Unit in the State Prosecutor's Office and the Fischer Behar Chen Well Orion & Co. law firm.
Meanwhile ICL announced yesterday that it has been extended a $675 million credit line for five years by a consortium of 17 banks, mostly international ones. Of that loan, $225 million will bear interest of the LIBOR rate plus 0.8%, while the rest will be 0.15% to 0.3% higher.
"The loan was made based on company policy for assuring a wide range of credit sources and to diversify funding," the company said.
ICL employs 11,000 people, including 5,000 within Israel. The company's sales totaled $4.6 billion in 2009, of which about half was from production in Israel. ICL produces potash, bromine, magnesium and various salts from the Dead Sea. The company also mines phosphates in the Negev, and potash and salt from mines in England and Spain.
ICL operates through ICL Fertilizers, ICL Industrial Products and ICL Performance Products.