Sources inform ''Globes'' that unmanned aerial vehicle (UAV) maker Aeronautics Ltd. CEO Avi Leumi is stepping down 14 years after founding the company, and that he is heading a search committee to find his successor. Leumi will probably stay on as either chairman or president, but he will no longer be involved in day-to-day operations.
Yesterday, "Globes" revealed that KCPS & Co. states in its financial report for the third quarter of 2011 that Aeronautics is in breach of part of the financial covenants for the loan to the company, and talks are underway to solve the problem.
KCPS adds, "The company, especially at the solo level, has significant cash flow problems, due in part to the nature of the defense market. Most of the cash flow shortfalls are due to financing for large projects, and dependence on a small number of customers at any particular point in time. At the same time, the company has obtained projects through tenders, which make it more difficult to make long-term plans, and cause severe volatility in revenue compared with a fixed cost base."
Sources estimate that Aeronautics' revenue totaled $160 million in 2010, but that its revenue in 2011 was much lower.
KCPS also states, "Aeronautics has several possible business and technological breakthroughs in the coming years, which could boost it to the next stage of its development, from a mid-sized Israeli defense company to a large one."
Aeronautics has 750 employees, mostly at its manufacturing plant in Yavne. The company's UAVs are used by military and civilian authorities around the world. It is Israel's fifth largest defense company, after Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), Rafael Advanced Defense Systems Ltd., and Israel Military Industries Ltd. (IMI). Aeronautics' subsidiaries produce C4I (command and control communications computer and intelligence), navigation, aerial intelligence surveillance and reconnaissance (AISR), data link, and UAV propulsion systems.
Leumi founded Aeronautics in 1998. Its shareholders also include 888 Holding plc (LSE:888) shareholder Avi Shaked, who invested in the company in 2007; Viola Private Equity, Poalim Capital Markets - Investment Bank Ltd., KCPS, and Bereshit debt recycling fund.
In September 2011, Aeronautics raised $35 million in a convertible loan from the KCPS and Bereshit at a company value of $300 million, after money. Most of the capital was used to acquire joint control of Controp Precision Technologies Ltd. at a company value of NIS 300 million. Controp is a manufacturer of electro-optical and precision motion control systems, including cameras for UAVs.
Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2012
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