Business in Brief: Bank Shares Pace Declines in Tel Aviv

Migdal quarterly loss brings total for big insurers to 721 million shekels; Vonetize plans NIS 57.8 million IPO in Tel Aviv using eased rules.

AP

Vonetize plans NIS 57.8 million IPO in Tel Aviv using eased rules

Vonetize, which is developing a platform for video on demand, will be the first company to test the new and easier rules for high-tech companies making an initial public offering on the Tel Aviv Stock Exchange. The company issued a prospectus Tuesday to raise 57.8 million shekels ($15 million) this month in a package of shares and warrants priced at 771 shekels each. The company’s turnkey video-on-demand service provides content and a cloud-based technology platform for smart TVs and mobile devices that offers everything from first-run Hollywood movies to children’s programming. Vonetize, which carries a “going concern” warning, has been operating only in the Israeli market but said in the prospectus it has bought content rights for Hollywood films and other content for 59 countries and has been signing up customers at a rate of 15,000 a day. The new rules allow qualifying companies to do their financial reporting in English using U.S. accounting standards as well as use easier corporate governance standards. (Shelly Appelberg)

Migdal quarterly loss brings total for big insurers to 721 million shekels

Migdal, Israel’s biggest insurance company by assets, turned in a 494 million-shekel ($128.2 million) loss for the first quarter, bringing the combined losses for the six biggest insurers to 721 million shekels. Migdal was the last to report, filing its statement just before the midnight May 31 deadline. It said the losses were due to 837 million shekels in provisions it made for low interest rates because they require it to beef up reserves for future payments to policy holders. A day earlier Clal Insurance posted a 250 million-shekel loss while three others posted wafer-thin profits of 23 million shekels or less. All told, insurers were forced to make 1.3 billion shekels of provisions for the quarter just on low interest rates. Meir Slater, an industry analyst at Bank of Jerusalem, said he wasn’t concerned. “The minute rates start to rise, all these losses will be erased,” he said. (Assa Sasson)

Extell bonds plunge on first-quarter report

The bonds of Extell Limited dropped sharply yesterday in Tel Aviv Stock Exchange trading after the New York property company released its first-quarter financial report that showed it posted a $30 million loss and negative working capital of $23 million. Prices for Extell’s Series Aleph and Bet bonds, worth 1.6 billion shekels ($420 million), both fell 3% and were trading at 80 agorot, meaning they were trading at junk yields of 13% to 14%. The company, which is controlled by Gary Barnett, also showed negative cash flow of $60 million. The company also reported that a $285 million loan from Blackstone Mortgage Trust for its Central Park Tower has been put on “stand still,” meaning the borrower is in breach of terms. Blackstone agreed to a 12-month grace period before repayment but only in exchange for raising the interest rate to 14% from 8%, adding up to an extra $17 million due on the loan.  Extell’s directors said the company isn’t in danger of meeting it obligations. (Michael Rochvarger)

Bank shares pace declines in TASE

Bank shares led the Tel Aviv Stock Exchange lower yesterday. The benchmark TA-25 index ended down almost 0.3% at 1,440.45 points, while the TA-100 fell 0.2% to 1,252.34, on turnover of just over 1 billion shekels ($260 million). Bank Leumi paced the drop in bank shares with a 2.1% decline to 13.84 shekels. Tech stocks were mostly higher, led by Ability with a 7.6% gain to 5.72. CanFite jumped 7.6% to 5.72 after it reached agreement with the European Medicines Agency on the final design of a Phase III trial for its rheumatoid arthritis drug. Africa Israel Investments finished up 8.6% at 1.27 after it said it sold three Crowne Plaza Hotel branches for 714 million shekels, much if it to go for repaying debt.  SodaStream pulled back 2.5% to end at 77.79 after rallying the day before on the launch of a home beer-making device. (Ruti Levy)