The board of Vita-Galilee Fruit Ltd. (Vita-Pri Galil) (TASE: VITA) is due today to file with the Haifa District Court an objection to receivership and foreclosure of the liens filed by Bank Leumi (TASE: LUMI) and Israel Discount Bank (TASE: DSCT). The company and its subsidiaries will also convene shareholders and creditors' meetings to submit to them a recovery plan. Vita entered into receivership when Bank Leumi and Discount Bank refused to again postpone repayment of the company's debts.
Yesterday, hundreds of Vita employees demonstrated outside the company's main plant in Hazor Hagalil, to protest against the receivership proceedings. The employees blocked the main road between the town and Kiryat Shmona, and burned tires at the factory entrance.
Vita employees 400 permanent staff and hundreds of seasonal staff at its two plants in Hazor Hagalil in the Galilee and Kiryat Malakhi in the Negev. Two months ago, a "Globes" investigation found that the company's main suppliers had stopped working with the company. Nevertheless, Vita's management insisted that it was not in financial trouble. Vita's workers committee admitted that there was a serious problem, but said that it hoped that the company's financial situation would not deteriorate any further. The company has been in decline for several years.
On Friday, receivers were appointed to the company after Bank Leumi and Discount Bank filed an ex parte request with the court. Vita's debts total NIS 160 million, including a NIS 10 million government loan. Vita also owes NIS 10 million to preferred creditors, and NIS 88 million to unsecured creditors, including NIS 38.5 million to farmers and to packaging manufacturers.
In recent weeks, Vita's management has met a number of potential investors, including Yaakov Cheskala, the owner and CEO of rival Prinir Ltd.; and David Ezra, the owner of food company Neto, who is only interested in Vita's marketing and distribution business but not its production activity.
The TASE suspended trading in Vita shares yesterday following the appointment of the temporary receiver for the company. The company has a working capital deficit of NIS 65.6 million and lost NIS 7.4 million in January-September 2008. A going concern warning was attached to its financial report for the third quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on January 19, 2009
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