Business in Brief - U. Dori Losses Balloon to $116 Million

U. Dori losses balloon to $116 million; Eliezer Fishman moving forward with plans for IPO of cellular tower operator T4U Holding Brasil.

Eran Azran
Assa Sasson
Michael Rochvarger
Dror Raich
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Businessman Eliezer Fishman.Credit: Moti Milrod

U. Dori losses balloon to 416m shekels in 18 months
U. Dori Construction, the financially troubled builder, said Monday it ran up losses of 416 million shekels ($116.3 million) over 2013 and the first half of 2014. The losses — which the company uncovered in July, forcing it to restate earnings going back to fourth quarter 2012 — left it with negative equity of 235 million shekels at the end of June and negative cash flow of 176 million shekels, Dori said. Revenues plunged 58% in the first half of this year, to 565 million shekels. Nevertheless, Gazit-Globe, Israel’s largest real estate investment company and Dori’s parent, reported a sharp increase in profit Monday. Gazit-Globe said it earned 146 million shekels in the second quarter, up from 60 million a year earlier, even as it restated its financial reports going back to the end of 2012 to reflect problems at Dori. Last week Gazit unveiled a 450 million shekel plan to rescue Dori, including a cash injection of 130 million shekels and a 250 million shekel credit line. Gazit shares ended up 1.9%, at 45.55 shekels in Tel Aviv, while Dori rose 0.9% to close at 1.03 shekels. (Eran Azran)

ISA draft decision: Israel has ‘deep’ corporate bond market
Israel has a sufficiently deep corporate bond market that companies may use corporate bond yields as a baseline for valuing their pension liabilities to employees, the Israel Securities Authority said in a draft ruling Monday. If the decision is final, it promises to save companies substantial amounts of money. It would allow them to set aside less for their future pension liabilities and add it to their shareholders equity, since yields on government bonds, which have been the standard until now, are routinely lower than those on corporate debt. The discount would apply to companies whose bonds are rated AA or above, the ISA said in a 178-page document. One of the biggest beneficiaries of the change would be Bank Leumi, whose equity as of the end of June was reduced by 3.5 billion shekels due to pension liabilities. If the change is implemented, the reduction would be just 1.4 billion shekels. That, in turn, means the bank will be able to meet mandated capital adequacy ratios by 2016 that enable it to resume paying dividends. (Asa Sasson and Michael Rochvarger)

Fishman readying IPO for Brazilian holding
Eliezer Fishman is moving forward with plans for an initial public offering of his T4U Holding Brasil SA, one of Brazil’s biggest operators of mobile phone towers. No details such as the IPO’s potential size or the suggested price tag were included in the prospectus issued last month, but sources estimated the sale would value the company at between $300 million and $350 million. T4U will be selling new shares as well as stock controlled by existing shareholders. The filing, the first in Brazil in about a year, comes as Fishman faces debt repayments to Migdal Insurance and local banks. The IPO’s timing looks good amid soaring demand for high-speed Internet, which has spurred the construction of thousands of towers in Latin America’s largest country. Many mobile phone operators are opting to lease towers inserted of owning them, as a way to preserve cash and protect profits. (Michael Rochvarger)

Tel Aviv shares end higher, despite Europe
Shrugging off weaker European markets, Tel Aviv shares resumed their ascent Monday, led by the technology and real estate sectors. The TA-25 and TA-100 indices both rose about 0.7%, reaching 1,410.21 and 1,274.02 points, respectively, on turnover of 979 million shekels ($273.8 million). “It’s a little difficult to say whether the market is preserving its upward momentum due to the ‘peace talks’ between the finance minister and the Bank of Israel governor or due to the dwindling alternatives in the fixed-income market,” said Idan Azoulay of Epsilon Investment House. Oil Refineries Ltd. led shares higher, gaining 4.8% to a close of 1.27 shekels after S&P Maalot rated a planned bond offering of 750 million shekels BBB the company plans to use to recycle debt. Industrial Building Limited rose 2.8% to a close of 7.13 shekels. The dollar extended its gain, appreciating 0.3% to a Bank of Israel rate of 3.5790, while the euro weakened to 4.7018. (Dror Reich)