Hooking up new neighborhoods to the national grid is liable to face delays until a solution is found to Israel Electric Corporation's (IEC) (TASE: ELEC.B22) financial distress, sources at the utility told "Globes". The comments followed a decision by IEC's board of directors last Thursday to urgently ask Minister of Finance Yuval Steinitz and Minister of National Infrastructures Uzi Landau for government intervention in IEC's financial crisis.
The board also decided to defer a decision on allowing IEC's management to finance the company's development plan through additional debt offerings, until Steinitz and Landau respond.
"The board of directors basically told the government, 'we've had it'," a source at IEC told "Globes". "We won't take out loans to finance the development plan on which we're losing money. It's unacceptable that IEC's owners will let it sink without putting their hands into their pockets."
IEC said that the company can finance its current liabilities and serve its NIS 5.5 billion debt over the next two years. However, the utility said that it cannot finance the development plan, which costs $2 billion a year, set by the Ministry of National Infrastructures.
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2010
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