Kenon Holdings Ltd (TASE:KEN: NYSE: KEN-WI), Idan Ofer's holding company, today published its long-delayed second-quarter financial statements. The delay resulted from the wait for the results of Zim Integrated Shipping Services Ltd., in which Kenon holds a 32% stake. Kenon reported a NIS 280 million net loss for the quarter, mainly due to the losses of Zim and faltering Chinese auto manufacturer Qoros, for which Kenon had to write off $72 million and $129 million, respectively. Kenon lost $308 million in the first half of the year, compared with a $30 million profit in the corresponding period in 2015. Kenon had only $56 million in cash left at the end of the second quarter.
Kenon's investment in Zim is now worth only $90 million. For its 50% holding in Qoros, Kenon reported in April 2016 that Ansonia Holdings, Idan Ofer's investment company, through which he controls Kenon, would inject capital into Qoros instead of Kenon. Kenon reported that Qoros's shareholders, Chinese company Chery and Kenon, injected $134 million into Qoros in April-September 2016, split equally. At the same time, due to Qoros's problems, Kenon increased its guarantees for Qoros's debt by 50% to $164 million.
Zim, which is suffering from excess supply in the global shipbuilding market, last week reported particularly poor results for the first half of 2016. Its revenue plunged 20% to $1.24 billion in the first half of the year, giving the company a $1 million operating loss, compared with a $163.7 million operating profit in the corresponding period last year. In the bottom line, Zim reported a $132.5 million net loss in the first half, compared with a $20.9 million net profit in the corresponding period in 2015. The company's debts now total $1.8 billion, and its poor first half results gave it a negative equity of $62 million.
Zim, headed by chairman Aharon Fogel and president and CEO Rafi Danieli, requested a postponement for publishing its financial statements in order to obtain the consent of the company's creditors, including its local bondholders, for postponement of repayment of part of the debt. The company reached an agreement in principle for the postponement of $115 million it was to have paid to some of its creditors over 12 months, starting on September 20, until January 1, 2018, in return for paying interest of LIBOR plus 2.8% in cash quarterly. Zim believes that the chances that the new agreement will obtain final approval in the coming weeks are good. Two years ago, Zim's creditors wrote off 50% of the company's $3.4 billion debt.
Kenon's main asset as of now is IC Power, which operates power stations in Central and South American countries and in Israel. IC Power's revenue totaled $459 million in the second quarter of 2016, 38% more than in the corresponding quarter last year. In the bottom line, IC Power lost $7 million, compared with a $15 million net profit in the second quarter of 2015, due among other things to an accounting write-downs and non-cash financing expenses.
A rise in car sales pushed Qoros's second quarter revenue up 63% to 599 million yuan ($90 million) in the second quarter, but its net loss was up 22% to 581 million yuan ($87 million). Qoros has 5.6 billion yuan ($841 million) in bank debt, $160 million of which Kenon has guaranteed. Due to its ongoing losses, Qoros has needed regular assistance from its shareholders. Kenon injected $200 million into Qoros last year, which Kenon borrowed from fellow subsidiary Israel Corporation (TASE: ILCO) in exchange for a lien on Kenon's IC Power shares. Now, however, Kenon has no other resources for increasing the loans. The Kenon share price has dropped 22% over the past year, bringing the company market cap down to NIS 2.3 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on October 9, 2016
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