Tnuva employees called a halt on Thursday to their labor slowdown after management agreed to pay them 137 million shekel ($39.4 million) share in the proceeds from the sale of a controlling interest in the company to China’s Bright Food of China.
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The amount is about half the 258 million shekels workers’ committee had initially demanded, a figure equal to about 3% of what the British buyout fund Apax Partners is getting for the sale of its 56% stake in the diary company.
As its stands now, the proceeds will only be distributed to employees who are organized through the Histadrut labor federation and employed through a collective labor agreement. On the other hand, Ahiav Simhi, the chairman of Tnuva’s workers’ committee, has said that he is working to extend the payments to all Tnuva employees.
The prospect of further labor action would have come at a particularly problematic time for Tnuva, Israel’s largest maker of cheese and other milk-based products, coming days before the Jewish holiday of Shavuot, during which Jews traditionally each dairy products. Workers this week had already delayed the distribution of soft cheese products before the issue was resolved.
Meanwhile, Tnuva reported that its first-quarter net profit dropped 3.6% from a year ago 84 million shekels as revenues edged down 1.7% to 1.72 billion shekels. By contrast, Tnuva’s gross profits rose by 6.1% for the quarter thanks to a drop expenses related to sales and services. The dairy firm’s operating profits remained stable at 131 million shekels.
Closely held Tnuva’s earnings were actually reported by Tnuva minority shareholder Mivtach Shamir Holdings, which is publicly traded on the Tel Aviv Stock Exchange.
In a related development, Bright Food, which is owned by the Chinese government, is seeking a syndicated loan of up to $800 million to back its acquisition of the majority stake in Tnuva, banking sources told the Reuters news agency. Bright Food was not immediately available for comment.
Bright Food has reportedly asked banks Tuesday to send in proposals for one or three-year loans of up to $800 million equivalent in euros with bullet repayment.
The company sent out invitations to banks on Tuesday and has asked for indicative proposals within 10 working days, sources said.
With reporting from Reuters.