Tefron Ltd. (Bulletin Board: TFRFF; TASE:TFR) shareholders First Israel Mezzanine Investors Fund (FIMI), controlled by CEO Ishai Davidi, and Mivtach Shamir Holdings Ltd. (TASE:MISH), controlled by Meir Shamir, will come to the textile company's rescue - but with conditions. They are willing to inject up to $4 million into the company, through their joint venture Norfet LP, by participating in a rights issue previously planned by Tefron.
Last week, Tefron announced that it was in operating difficulties and that the banks had cut off its credit at $29 million. After meeting with banks, Tefron said that it was formulating a business plan for 2010, which it would present to Bank Hapoalim (TASE: POLI), Bank Leumi (TASE: LUMI), Israel Discount Bank (TASE: DSCT) by the end of the year. If the banks approve the plan, they will make every effort to aid the troubled textile company.
Tefron planned the rights issue before the latest developments, which have put the company's Galilee factory at risk of closing. Norfet, which owns 20.8% of Tefron, notified the company that its participation in the rights issue was subject to the banks' approval of the business plan, Tefron reaching a comprehensive settlement with its bank lenders that would permit Tefron to continue its operations, and obtaining the necessary corporate approvals and authorizations by Norfet for the investment.
Tefron's share rose 1.8% by early afternoon on the TASE today to NIS 14.09. The share closed at $3.50 in New York yesterday.
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009