Starling Advanced Communications Ltd. (TASE:STLG) has obtained a $7 million owners' loan from Elron Electronic Industries Ltd. (Pink Sheets: ELRNF; TASE: ELRN) and Rafael Development Corporation (RDC), four months after the IDB Holding Corp. Ltd. (TASE:IDBH) unit had a going concern warning attached to its financial report.
Starling also appointed Dr. Shimon Eckhouse as chairman. Starling develops, manufactures and sells satellite broadband communications antenna for the civilian market. Its products are installed in aircraft, trains, buses, and fire and rescue vehicles.
Elron owns 31% of Starling, and RDC, Elron's joint venture with Rafael Advanced Defense Systems Ltd. owns 36%. The loan will be paid in two installments: $3 million on August 12, and the $4 million balance in January 2011, subject to agreement by Starlings' shareholders. The loan will bear 6% annual interest.
Starling can repay the loan early under one of two circumstances: after two years from the first payment, or three days after the company receives proceeds from an offering on the TASE or a private placement.
Starling took the owners' loans after its attempt to obtain a bank loan was rejected. The company said in its notice to the TASE, "The banks are not interested in extending a loan without guarantees from the shareholders or financial collateral."
Starling's share price fell 7.4% to NIS 1.85, giving a market cap of NIS 19 million.
Published by Globes [online], Israel business news - www.globes-online.com - on July 26, 2010
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