Six months after Zaki Rakib signed the agreement to take over Ma'ariv, no cash has as yet been injected into the group's emptying coffers. Yesterday, Ma'ariv released its second quarter financials, after Rakib promised to transfer the entire investment of cash within two weeks. At the moment, the two sides are firmly denying any possibility that the deal will be cancelled. If that happened, things would snowball for Ma'ariv.
Ma'ariv's financial statements show that its liquid resources shrank to NIS 7 million, while its cash burn rate remains high. Ma'ariv lost NIS 22.3 million in the second quarter, and NIS 33 million in the first half, wiping out 75% of its shareholders' equity.
The auditor's report states that "the company's continuing activity in its current format, and its ability to meet its obligations, depends on completion of the investment agreement, the probability of which is high; on abiding by the business plan and the cash flow forecast derived from it; on recycling loans, and continuing credit lines from banks and the parent company."
According to the investment plan signed in March and amended in May, high-tech millionaire Rakib is due to invest $15 million in Ma'ariv.
Like most of the print journalism sector in Israel, Ma'ariv has suffered in recent years from the long arm and deep pockets of American Jewish billionaire Sheldon Adelson, owner of the daily freesheet "Israel Today", with its steadily growing distribution.
"During the first half of the year, competition between the daily newspapers grew fiercer because of the larger print run of "Israel Today" on weekdays and in its weekend version," Ma'ariv's report states. "The first half of 2010 represents the culmination of a process that began three years ago, and has redefined the structure of competition in Israel's national newspaper industry, from a situation in which the economic behavior of all the players was on similar lines, to a reality in which a new player has joined playing according to different rules a freesheet."
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2010
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