Israel Chemicals (TASE: ICL: NYSE: ICL) is planning a NIS 1.25 bond issue, its first in Israel. In the past few hours, the company’s underwriters have distributed a draft deed of trust to investment institutions in order to obtain their response to its conditions.
ICL already has a bond series traded overseas, with a 4.5% interest rate - 250 points (2.5%) higher than the interest rate on the corresponding US government bonds - due to mature in 2024. The series to be issued will be five-to-six-year shekel bonds.
An important capital market figure told "Globes" today that this series gave a bad impression, because the company's future was in doubt, both with respect to its franchise for Dead Sea mining and concerning regulation in Israel. "If the company's franchise in the Dead Sea is not extended, Israel Chemicals and its investors will have a problem. It is obvious that a bond issue will fly in the current state of the markets, but the risk should be properly priced, and it does not appear that the market is ready for it now," the source declared.
The new bond series (Series E) is repayable in four equal annual installments at the end of March 2021-2014. Maalot rated the series AA with a stable outlook.
Israel Chemicals' previous overseas bond series totals $800 million, but it is believed that most of the bonds are held by the largest investment institutions in Israel.
Israel Chemicals, a subsidiary of Idan Ofer-controlled Israel Corporation (TASE: ILCO), has a market cap of NIS 22.4 billion. The company reported $5.4 billion in revenue and a $509 million net profit for 2015. Israel Chemicals' 2015 cash flow totaled $573 million, and its equity as of December 31, 2015 was $3 billion, a third of its $9.1 billion balance sheet total.
Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2016
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