Textiles company Tefron Ltd. (Bulletin Board: TFRFF; TASE:TFR) said today that it had met with the three banks to whom it owes a total of around NIS 35 million, and will be able to continue using the amount of its credit framework already being used. The company will give the banks a detailed business plan for 2010 by the end of this year. For the next three weeks the banks will not move to collect on their debts, and if Tefron's proposed recovery plan is acceptable to them, a banking source told "Globes" that they will "make every effort" to help the company.
Tefron is at risk of closure, due to a NIS 35 million debt to Bank Hapoalim (TASE: POLI), Israel Discount Bank (TASE: DSCT), and First International Bank of Israel (TASE: FTIN1;FTIN5). The company has 1,000 employees at its plant at the Gush Segev industrial zone in the Galilee, as well plants in Jordan and the Far East, and the employees' jobs are in jeopardy.
Tefron shares are due to resume trading at 2:00 today. TASE management earlier today suspended trading in Tefron's share in response to the reports. The TASE stated, "Following the uncertainty in the company's affairs, due to reports about the risk of closing of the company's factory, trading in the shares has been suspended. The TASE has contacted the company for clarifications."
Sources inform ''Globes'' that the Histadrut (General Federation of Labor in Israel) has been trying to unionize employees at Gush Segev, after a small number of employees previously joined the Histadrut. By next week, enough employees will have reportedly joined the Histadrut to make it their legal representative. At that point the Histadrut will be in a position to negotiate with management over employees' future rights.
Histadrut Carmiel District chairman Yoav Klein told "Globes" today, "Regrettably, the textile industry barely exists any more in Israel. Textile plants came here because of the composition of the population, and their departure is a lethal blow to the north. No one in the government is trying to find a solution; they're always saying, 'We need high tech", but forget that not everyone can work in high tech. Even encouragement grants barely go to Carmiel, because the government prefers Yokne'am."
Last week, the sewing thread factory of Molitan Ltd. in Nahariya was reportedly at risk of closing down because of debts to Discount Bank and Bank Leumi (TASE: LUMI). The fact that Tefron is in real jeopardy demonstrates that advanced technology used by the industry is not enough to save it.
Tefron is controlled by First Israel Mezzanine Investors Fund (FIMI), run by managing partner Ishai Davidi, and Mivtach Shamir Holdings Ltd. (TASE:MISH), controlled by Meir Shamir. The share rose 1% before the announcement to NIS 12.60, giving a market cap of NIS 27.8 million. The share closed at $3.25 on the Bulletin Board in New York yesterday.
Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2009
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