Israel Petrochemical Enterprises (TASE:PTCH) reported at the end of last week that it was negotiating an investment Avgol Nonwoven Industries, a manufacturer of nonwoven fabrics. Avgol's controlling shareholder is Yehoshua (Shuki) Goldwasser. The company attempted to go public on the Tel Aviv Stock Exchange (TASE), but failed, due to a low level of interest on the part of institutions.
Avgol manufactures spunbond and spunbond-meltblown-spunbond (SMS) nonwovens for hygiene, healthcare, construction, agriculture and textile applications. The company provides 10% of the world's raw materials used in baby diaper manufacture. Customers include Procter and Gamble (NYSE:PG) and Kimberly-Clark (NYSE:KMB). Avgol's sales turnover for the first half of 2005 was NIS 340 million, and its profit was NIS 18 million.
Prior to Avgol's IPO attempt, a "Globes" investigation revealed that the company had failed to meet its covenants with the banks, and had not mentioned this fact on the cover of the prospectus, as required. Moreover, the prospectus revealed that Avgol had made use of its entire $150 million line of bank credit. $70 of that debt was owed to Bank Leumi (TASE:LUMI), whose subsidiary, Leumi & Co. Investment House Ltd., was lead underwriter for the issue. Avgol itself tried to raise NIS 200 million in stocks and bonds in an issue based on a company value of $100 million.
Israel Petrochemical Enterprises is owned by Modgal Ltd., a company owned by the Federmann family and Leonid B. Nevzlin. Israel Petrochemical Enterprises main holding (50%) is Carmel Olefins, a leading manufacturer of ethylene, polyethylene and polypropylene, the main raw materials used in the plastics industry. Israel Petrochemical Enterprises is also a partner in a consortium of Israeli and international companies engaged in natural gas exploration in territorial waters off the coast of Israel.
Published by Globes [online], Israel business news - www.globes.co.il - on Sunday, December 25, 2005