IEC exec resigns over NIS 1.5b shortfall

Israel Electric Corporation (IEC) (TASE: ELEC.B22) today announced that finance division manager Zechariah Kay (62) was taking early voluntary retirement. IEC CEO Eli Glickman thanked Kay for his contribution, and asked him to stay on until a successor was found.

Sources inform ''Globes'' that Kay's unexpected resignation is related to an embarrassment at the utility. On September 24, IEC notified the TASE about a NIS 1.5 billion cash flow shortfall, which it attributed to an updated calculation of cash flow expected through the end of 2012, because expenses would be NIS 1.5 billion higher than originally estimated. "This was due to relatively high demand for electricity during the summer months, and higher prices for fuels used by the company," stated IEC.

The notice stunned the Ministry of Finance because just a month earlier, IEC's management had promised it that it would not need any additional cash this year. The promise was made as part of the understandings with the ministry, which enabled the utility to receive government guarantees for the raising of an additional NIS 2 billion.

This increased the government's guarantees to IEC to NIS 5 billion for the year, which were granted over strong objections by Accountant General Michal Abadi-Boiangiu.

IEC told "Globes" in response, "IEC's cash flow is based on complex forecasts. When the cash flow shortfall became known, immediate notice was given on September 24. IEC is examining the matter with the help of its outside advisers."

A source at IEC told "Globes", "There is no connection between Kay's retirement and the cash flow shortfall which was disclosed." The source added, "IEC's CEO would not have thanked Kay for his performance had he believed that Kay was to blame for the cash flow shortfall, and he certainly would not have praised Kay for his performance over the years and asked him to stay on until a worthy replacement was found."

Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2012

IEC exec resigns over NIS 1.5b shortfall

Finance division manager Zechariah Kay is taking early retirement, after IEC admitted to the cash flow shortfall.