Court cancels order to stop Oil Refineries operations

Oil Refineries
Oil Refineries

Oil Refineries called Haifa Mayor Yahav's action "lacking authority, groundless, and legally invalid."

Oil Refineries Ltd. (TASE:ORL) is responding to the extraordinary step taken yesterday by Haifa Mayor Yona Yahav, who canceled its licenses, issued an executive order to halt the operations of its plants, and used garbage trucks to block access to one plant. In addition to removing the trucks with a crane, Oil Refineries petitioned the Haifa Local Affairs Court, which granted the petition and issued an order staying the cancelation of the company's business licenses until ruled otherwise. A hearing with both parties has been scheduled for tomorrow. Oil Refineries said that it regarded "the announcements by the mayor as "lacking authority, groundless, and legally invalid."

Oil Refineries, controlled Israel Corporation (TASE: ILCO), whose controlling shareholders are Idan Ofer and Israel Petrochemical Enterprises Ltd. (TASE:PTCH), operates in the Haifa area, both in its own name and through subsidiaries Carmel Olefins Ltd. (TASE: CRO.B1), Gadiv Petrochemical Industries, and Haifa Basic Oils. These three subsidiaries operate in the petrochemicals sector, producing raw materials for the production of other materials. Carmel Olefins makes polymers used mainly in the plastics industry (polypropylene and polyethylene), Gadiv Petrochemical produces aromatic materials (such as benzene and paraxylene), and Haifa Basic Oils also makes raw materials for the production of various items.

The three subsidiaries' facilities, located on one site in Haifa Bay area, cover hundreds of dunam (hundreds of sq.km.), and contain initial refining units, catalytic cracking facilities, units for refining fuel products, production units, sulfur treatment facilities, etc.

It all began with a report

The Haifa area drama began last Tuesday, when the Ministry of Health published figures showing an exceptionally high rate of cancer among children in the Haifa Bay area. The Oil Refineries share price has since plunged nearly 8%, after having surged 43% between the beginning of the year and last Tuesday.

The bonds issued by Israel Petrochemical, a major shareholder in Oil Refineries controlled by David Federman and his partners, were also down sharply, amounting to a drop of over 10% in some of the series. Oil Refineries shares rose slightly today, and the trend in most of Israel Petrochemical's bonds was also positive. At the beginning of the year, Israel Petrochemical's bondholders approved a NIS 2 billion debt arrangement writing off some 40% of the debt.

Israel Petrochemical, whose share is traded at a miniscule NIS 15 million market cap, offered its bondholders two alternatives: one simulating the company's liquidation without its actual liquidation, with the bondholders receiving a share of its only asset - Oil Refineries shares. The other alternative was to continue holding the debt, which would be rescheduled until a later date, without receiving interest until the repayment date, in exchange for an allocation of Israel Petrochemical shares.

Published by Globes [online], Israel business news - www.globes-online.com - on April 20, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Oil Refineries
Oil Refineries
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