Business in Brief: Africa Israel Narrowed Losses in Quarter but Continued to Bleed Cash

Jerusalem Economy reports second straight quarter of profits; Leader Capital Markets sold to ex-managers; Israel Chem, drug stocks lift Tel Aviv indexes.

Itay Sikolski

Africa Israel narrowed losses in quarter but continued to bleed cash

Africa Israel Investments, the real estate company controlled by Lev Leviev, narrowed its loss in the second quarter, but it continued to bleed cash and to struggle to repay debt. The company said second-quarter loss attributable to shareholders narrowed to 163 million shekels ($43 million) from 197 million shekels a year ago; revenue rose 23%, to 1.68 billion shekels. But shareholders’ equity was a negative 2.75 billion shekels at the end of the quarter and the company will report a massive loss of 2.4 billion shekels in the third quarter from selling its AFI Development unit to Leviev. Cash flow will be a negative 16 million shekels for the year, it estimated. Africa Israel has suspended assets sales while it negotiates a bailout with creditors. The company said it will meet 584 million shekels in debt repayments coming due this year, mainly by selling 550 million shekels in shares in a subsidiary. Shares of Africa Israel fell 5.2% to close at 1.34 shekels. (Shelly Appelberg)

Jerusalem Economy reports second straight quarter of profits

Jerusalem Economic Corporation, the property company hit hard by the downturn in the Russian economy, on Tuesday reported net profit of 51 million shekels ($13.5 million), its second quarterly profit in a row after a series of losses. JEC, which was controlled by Eliezer Fishman until March, generated badly needed liquidity, raising 750 million shekels in a share offering earlier this year and enjoying a 70% jump in the market valuation of its Industrial Building unit. JEC also expects relief from its big trouble spot, the Russia-focused Mirland unit, via a debt accord that will trade most of JEC’s equity in the unit in exchange for creditors erasing most of its debt. Net operating income was down 11.6% in the quarter to 220 million shekels, but the company had 800 million shekels in cash or near-cash on its books to service 300 million shekels in debt payments due this year.  JEC shares finished up 3.8% at 8.50 shekels. (Michael Rochvarger)

Leader Capital Markets sold to ex-managers

Leader Investments on Tuesday reached an agreement to sell its brokerage and underwriting businesses to a group of ex-managers led by former CEO Amit Vardi for 25 million shekels ($6.6 million). Vardi will be chairman of the spun-off business, to be called Leader Capital Markets, and former Deputy CEO Shai Ben-Yakar will take over as CEO. The U.S. financial-services firm Jefferies is reportedly ready to take a two-figure percentage stake in Leader Capital Markets for a small sum, in a deal expected to be wound up by the end of September. Jefferies would increase its stake going forward and Leader Investments would extend a 6-year, 15- million-shekel loan to the buyers. Leader Capital Markets’ value is based mainly on the reputation of its managers and a list of blue chip clients, including businessmen Zadik Bino and Yitzhak Tshuva and property company Gazit Globe. (Michael Rochvarger and Assa Sasson)

Israel Chem, drug stocks lift Tel Aviv indexes

Tel Aviv shares broke a four-day string of losses on Tuesday, lifted by Israel Chemicals and pharmaceutical shares. ICL closed up 4.5% to 15.90 shekels ($4.19) in heavy trading after Bloomberg News reported that Canadian fertilizer companies Agrium and Potash Corp. of Saskatchewan were in talks to merge, a move that could help reduce oversupply in world potash markets. Parent company Israel Corporation added 3.6% to 697.20. The TA-25 and TA-100 indexes each climbed nearly 0.2% to end at 1,448.84 and 1,237.89 points, respectively, on turnover of 941 million shekels. Teva Pharmaceuticals ended lower, but Perrigo advanced 2.4% to 342.30 and Opko Health rose 2.8% to 35.66. Partner Communications was up as much as 4.2% after Psagot Investment House bought 10 million shekels of shares at 18, but by the end of the day the share pulled back to 18.03, a gain of just 0.6%. Golf shed 2.1% to 5.99 after reporting a 30-million-shekel second-quarter loss. (Guy Erez)