In October 2010, after Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) closed the sale of 012 Smile Telecom Ltd. to Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), generating a capital gain of NIS 300 million, Midroog Ltd. rated the bonds of Ampal, controlled by Yosef Maiman, at A3, reflecting a low level of credit risk. Just 14 months later, and three days after the company announced that it would seek a debt settlement with its bondholders, which would include a two-year postponement on paying the principal, Midroog cut its rating for Ampal's bonds to B3, reflecting "speculative debt involving high credit risk."
Midroog said, "The present rating reflects the failure to repay. The "Negative" outlook, reflecting the possibility of greater losses, was reiterated."
The present rating is three grades below the previous one. Meanwhile, the yield on Ampal's bonds has risen to 135%. Midroog reiterated its "Negative" outlook, indicating that more downgrades are possible in the future to levels appropriate for insolvent companies. Midroog says, "The rating will also be reviewed to reflect the success of the company's measures to postpone payment of the principal on the bonds and the rescheduling of payments."
Ampal's solo debt totals NIS 1.2 billion, including NIS 870 million in its three bond series, and the rest owed to the banks. The banks have liens on Ampal's shares in Gadot Chemicals Tankers and Terminals Ltd. (TASE: GDOT).
Ampal's need to seek a debt settlement is due to its main holding, Egyptian natural gas supplier East Mediterranean Gas Company (EMG), which has stopped regular deliveries to Israel this year because of repeated sabotage of gas pipelines in Sinai.
Ampal's share price rose 1.6% in early trading on Nasdaq today to $0.31, giving a market cap of $17.3 million, after 1.9% on the TASE today to NIS 1,20.
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2011
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