Ampal Lost $6 Million in 2005

Moments before morphing from a diversified investments company into an energy investments firm, Ampal-American Israel Corporation (Nasdaq: AMPL) reported losing $6 million in 2005. it also said it would be dual-listing its stock for trade in Tel Aviv and to redeem its 4% and 6-1/2% Cumulative Convertible Preferred Stock, leaving it with only ordinary shares.

But then, Ampal had lost three times as much, $18.4 million, in 2004.

Revenues in 2005 were $30.5 million, down from $31.5 million in 2004.

Ampal ended the year with total assets of $210.9 million and shareholder's equity of $88.9 million, versus $304.9 million total assets and shareholder's equity of $100 million at the end of 2004.

Fourth-quarter net profit was $0.5 million, or $0.02 per diluted share, on revenues of $1.2 million. In the parallel quarter Ampal lost $15.3 million, or $(0.78) per diluted share, on revenues of $6.9 million.

During the last year, Ampal sold its holdings in Industrial Building Corporation (TASE: IBLD), in the startup Modem Art, and in the Epsilon investment firm.

More to the point, it got rid of its main non-core asset, a holding in the MIRS cellular operator, which had racked up impressive losses over the years. in October 2005, Ampal sold all its 33% stake in MIRS to Motorola Israel for $89 million. Most of the money went to pay back bank loans. Ampal incurred a capital loss of $13.3 million on the MIRS selloff, but that turned into a $10.2 million tax refund.

Two months afterwards, Yossi Maiman, who owns a 58.8% interest in Ampal, announced a new direction for the company: energy. He said Ampal was buying a 2% stake in EMG, an Egyptian natural gas provider, for $30 million. The deal priced EMG at $1.5 billion.

It was an insider transaction: Ampal bought the EMG shares from Maiman's company Merhav. A special committee of directors convened to discuss the transaction, which it approved.

Being an American company, not an Israeli one, Ampal did not have to obtain the permission of its minority shareholders, as Israeli law requires in such cases.

EMG owns rights to export gas from Egypt to Israel and other Mediterranean nations. It means to transport gas to Israel via an undersea pipeline that should be ready in 2007.

Ampal has a one-year option to buy part of all 23% of Maiman's remaining shareholding in EMG. The value for the deal would be set by third-party appraisers.

Also, Ampal is one of the six companies contending to buy the Ashdod oil refinery from the state.