If all had gone according to plan, Israel Aircraft Industries Ltd. (IAI) subsidiary ImageSat International NV would have been listed on Nasdaq last year. The company had planned to raise $100-120 million at a company value of $400 million. It had already filed a prospectus with the US Securities and Exchange Commission (SEC) in a confidential procedure, and had chosen UBS as the lead underwriter.
Several problems caused a delay, including a crisis at IAI. Moshe Keret was not only president and CEO of IAI, he was also chairman of ImageSat. US investors reacted as could be expected to the investigations into Keret and his ouster, and were in no rush to open their wallets. No one is in a hurry to invest in a company whose managers are being investigated for corruption, and are unflatteringly mentioned in a report by the State Comptroller.
Sources inform ''Globes'' that ImageSat now plans to hold an issue on Nasdaq in mid-2006. Meanwhile, until the hoped for financing materializes, the company is considering raising money on the Tel Aviv Stock Exchange (TASE). The most likely possibility is to raise $30 million from Israeli investment institutions.
ImageSat declined to comment on the report.
In January 2001, ImageSat obtained a $70 million credit line from Bank Leumi (TASE:LUMI). The company is also considering obtaining another loan either instead of, or in addition to, raising money from Israeli institutions.
ImageSat is a promising company that owns Israeli-built Earth Remote Observation Satellites (EROS) photoreconnaissance satellites for commercial and civilian uses.
ImageSat’s main shareholders are IAI, with a 31% stake, fully diluted; Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), through El-Op Electro-Optics Industries, which built the satellites’ electro-optical systems 11%; Challenge Fund - Etgar; and US and European investors, including US company Core Software Technology. In 2000, the latter investors participated in a $90 million financing round led by Merrill Lynch & Co. (NYSE:MER) affiliated Pegasus Capital Advisors LP. Merrill Lynch was due to float ImageSat in 2003, an issue which never took place.
ImageSat launched its EROS A satellite in 2000 from Russia’s Baikonur Cosmodrome in Kazakhstan. The company will launch the EROS B this year and the EROS C in 2009. The Nasdaq IPO is intended to finance the launch of the EROS B, which could cost up to $100 million.
ImageSat’s main competitor is Lockheed Martin (NYSE:LMT) subsidiary Space Imaging Inc.’s Ikonos commercial Earth imaging satellite.
ImageSat reportedly has five or six contracts that generate a total of tens of millions of dollars a year in revenue. The company’s business model is to try to win as many customers with multi-year contracts as possible with, rather than one-time contracts, in order to obtain good visibility. Such customers will be able to control EROS’s cameras.
Published by Globes [online], Israel business news - www.globes.co.il - on January 31, 2006