Daily Roundup / Elbit Imaging Hit With 6-notch Downgrade

Modiin Energy's deep sea financial plunge; Teva breathes with lowered expectations; time is up for Elsztain to take bigger bite of Ganden.

Ruth Schuster
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Ruth Schuster

Elbit Imaging in danger of default, warns Maalot: S&P Maalot slashed Elbit Imaging's credit rating by six whole notches downgraded on Thursday, from BBB (not bad) to B (speculative). Barring meaningful developments, warn the credit rating agency's analysts, they see a reasonable probability that Elbit Imaging could default as soon as 2013, i.e., not meet all its liabilities in full. The company's financial flexibility and liquidity have deteriorated, partially because of delays in planned moves. At this point the company expects to start 2013 with NIS 82 million cash, but just this August it had anticipated beginning the year with NIS 100 million. The difference is due to a delay in dividends from subsidiary Plaza Centers, and apparently also over-estimation of cash flow in the fourth quarter. In 2013 Elbit Imaging has to repay NIS 630 million, and not all is covered by signed contracts, says the agency.

Modiin Energy raised shekels, but not enough: Modiin Energy raised NIS 56 million in an offering of participation units held on Thursday, the rub being that it wanted to raise NIS 75 million. Investors hardly applauded the whole deal, which also involved a rights issue: on Thursday the company's units lost 23% of their value in Tel Aviv trading. At its peak Modiin Energy had been worth NIS 912 million; after the deep-water prospects Sara and Myra turned out to be dry as a bone, its value plunged by more than 90%, to NIS 62 million after yesterday's debacle.

Good news at Teva to end the year: Analysts are smiling anew at Teva Pharmaceutical Industries, mainly because the Israeli pharma giant's stock has been hit hard enough this year – and mainly this month - to lower its multiples to highly attractive levels. New York-based Gabelli & Co. feels that Teva has lowered expectations to levels it's likely to surpass, regaining favor on the Street. Meanwhile, as Teva rethinks strategy, Globes reports that the company is severing its drug-development alliance with Proteologics, which is working on drugs to treat various metabolic and nervous system disorders.

Time runs out for Elsztain: The option held by Argentinian businessman Eduardo Elsztain to increase his interest in Ganden Holdings, which owns the controlling interest in the IDB group, expired yesterday. IDB did not announce its extension, but when asked, stated that it had been extended automatically. Elsztain had invested $25 million in Ganden in September. He received a 90-day option to invest $75 million more, that could be extended by 70 days if the various regulatory approvals couldn't be obtained in time. For instance, IDB explained at the time, the Finance Ministry had to approve of Elsztain buying a controlling interest in Ganden because IDB owns an insurance company (Clal Insurance), and he hasn't yet.

With reporting by Shelly Appelberg, Eran Azran

Elbit Imaging has plenty of quality assets, such as the Torun Mall built in Poland, which opened for business in November 2011.Credit: Maciej Zawadzki

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