Shamir Foods makes expiration official
Shamir Food Industries has formally announced its collapse, just 72 hours after releasing a going concern warning.
The company informed the Tel Aviv Stock Exchange yesterday morning that it is unable to raise any money and therefore cannot meet its liabilities. It is now trying to reach an agreement with its creditors.
Shamir also told the TASE that the Tnuva food concern has called in a NIS 1.2 million loan. But Tnuva, which is both Shamir's main customer and its distributor, will not be demanding this sum in cash; rather, Tnuva will deduct the amount it receives from selling the salads from the sum it owes the foodstuffs manufacturer. In total, Shamir owes Tnuva NIS 5 million.
Shamir, best known for its ready-to-eat salads, has an NIS 8.4 million equity deficit after accruing an NIS 11 million loss over the first nine months of 2005. Much of that loss results from costs Shamir incurred when it started to work with Tnuva.
As of the end of September, Shamir also owed NIS 12 million to the banks and NIS 4.5 million to others, including its suppliers. One of these is TASE-listed Bram Industries, which makes the plastic containers in which Shamir sells its products. Shamir owes Bram NIS 1.2 million.
It also owes some NIS 480,000 to its advertising agency, Publicis-Ariely - a relatively small sum compared to its other debts, but a very large one for an advertising agency of Publicis-Ariely's size.
Last week Shamir admitted that despite strenuous marketing efforts, its December 2005 sales had been especially weak. It was also hurt by the collapse of the Clubmarket supermarket chain, as none of Clubmarket's suppliers recovered all the money they were owed.
Shamir, which is controlled by Atzmon Rosh, Eyal Gelberg and Moshe Gorbitz, has been trying for the last two months to find either a source of financing or a strategic partner. It tried to interest the Central Bottling Company, the local Coca-Cola bottler, in such a partnership, but Central turned down the proposal. It also explored ideas such as issuing bonds or merging with another company, such as Miki Salads. However, none of these ideas panned out.
According to data collected by the Store-Next company, Shamir's alliance with Tnuva brought its products to the shelves of many more stores, but failed to increase Shamir's market share, which stands at about 6 percent.
The salad market, though growing, is considered one of the most competitive in Israel, and Shamir lacked the cash needed to build up a brand that could compete against the industry powerhouses: Osem's Sabra brand and Strauss's Ahla brand. It had hoped its alliance with Tnuva would provide the extra push it needed, but Tnuva, despite the hefty loans it provided to Shamir, elected to view the company as just another customer using its distribution network, and did not make any special efforts to push it.
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