Holding company Israel Petrochemical Enterprises Ltd. (TASE:PTCH), controlled by David Federman, Jacob Gottenstein, and Alex Pesel, has published its 2016 results, to which a going concern warning is again attached. The financial statements of the company, whose sole holding is a 16.3% stake in Oil Refineries Ltd. (TASE:ORL), show a negative revaluation of NIS 213 million resulting from a NIS 110 million drop in the value of its Oil Refineries holding. This pushed the company into a NIS 222 million loss, compared with a NIS 786 million profit in 2015 - the result of the debt arrangement reached during that year. Following the decline in the company's results, Israel Petrochemical Enterprises' shareholders' equity slid into the red, totaling a negative NIS 61 million.
Israel Petrochemical Enterprises' market cap is a measly NIS 25 million, following a nearly 30% drop in its share price over the past year, despite a simultaneous 11% rise in the Oil Refineries share during the same period. Last month, Israel Petrochemical Enterprises sold 4.1% of its Oil Refineries stake as part of a debt rescheduling arrangement with Bank Hapoalim (TASE: POLI) and the Bereshit fund, to which the company owes nearly NIS 470 million. Israel Petrochemical Enterprises reached a debt arrangement with the bank and the fund in early 2017, after having been due to repay a NIS 318 million loan to Bank Hapoalim and a NIS 148 million loan to Bereshit on February 1. After the sale of the shares and partial repayment of the debt, Israel Petrochemical Enterprises' outstanding debts stood at NIS 155 million to the bank and NIS 101 million to the fund. Under the debt arrangement, Petrochemical Enterprises is due to reschedule its outstanding debt to Bank Hapoalim by the end of June this year, and its outstanding debt to Bereshit by the end July.
In the company's financial statements, the company's auditors state, "The company's liabilities for repayment in 2017 amount to NIS 300 million, after transferring the proceeds from the sale of shares and the dividend obtained from Oil Refineries to Bank Hapoalim, the Bereshit fund, and holders of Series D bonds, according to the plan for postponement of the debt. The company has no financial means to pay these financial obligations, and its sole asset is Oil Refineries shares."
Published by Globes [online], Israel Business News - www.globes-online.com - on March 27, 2017
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