By chance or not, Emblaze Ltd. (LSE: BLZ), controlled by CEO Eli Reifman, decided to update investors about positive developments at the company at the same time as the press reported that private bonds issued by Reifman had not been redeemed.
A month ago, Reifman decided to call in the bonds and bring forward their redemption date. The bonds had been issued to a series of investment institutions and Israeli businesspeople, including Meitav Investment and Securities Advisers Ltd., Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), the Yuvalim fund, and Suny Electronics CEO Ilan Ben-Dov. Reifman was supposed to redeem the bonds at the end of last week, but asked the bondholders for a one week extension, until he could obtain financing from another source.
Most of the holders of Reifman’s private bonds are reportedly not worried by the delay, and this is understandable. First, the security Reifman provided was Emblaze shares (28.5% of the company’s share capital, worth $100 million). Emblaze’s main asset is its $240 million in cash.
Second, Reifman apparently presented the bondholders with alternative financing proposals he had received, including one from a UK hedge fund. Reifman will presumably accept the proposals, and roll over the debt, at least until next time.
Meanwhile, Reifman has chosen to update investors exactly how Emblaze will meet its forecast of $260 million revenue for 2006 provided a month ago. Today, the company announced that Emblaze Mobile Ltd., which designs and manufactures handsets, has been appointed by Virgin Mobile plc (LSE:VMOB; Pink Sheets:VGMHF) of the UK to manage its exclusive Lobster mobile phone range. Emblaze Mobile won a competitive tender among handset manufacturers.
Emblaze Mobile will be responsible for the Lobster product line, an exclusive brand oriented for the 16-30 age bracket. Market sources estimate the upper range of potential revenue from the contract at $100 million, and predict the delivery of 500,000 handsets a year.
Under the terms of the agreement, which will come into effect in June, Emblaze Mobile will be a “virtual manufacturer” for Virgin Mobile, responsible for sourcing, designing, customizing and supplying a range of products to form the Lobster phone range across all market segments.
Emblaze Mobile will also propose new product opportunities, manage the Lobster product roadmap, product development, product testing and conformance, stock management and logistics. Emblaze Mobile will facilitate the deal through its subsidiary European Telecom, acquired several months ago in order to deepen Emblaze’s presence in direct consumer activities in Europe.
Emblaze Mobile CEO Laurence Alexander said, "As a leading supplier of advanced mobile handsets to European mobile network operators, Emblaze Mobile were able to leverage this experience and existing infrastructure to offer a premium service for Virgin Mobile. We look forward to continue working with Virgin and taking the Lobster brand to a new level."
Published by Globes [online], Israel business news - www.globes.co.il - on May 31, 2006
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