At the last minute, Minister of Finance Yuval Steinitz did not submit to the cabinet for approval a bailout package for Israel Electric Corporation (IEC) (TASE: ELEC.B22), after its workers committee announced labor sanctions this morning to protest the plan.
Sources inform ''Globes'' that Steinitz decided to postpone the cabinet discussion on the bailout by one week, for further review. Steinitz aides declined to comment on the matter, but sources at the Prime Minister's Office said that the bailout package was not on today's cabinet agenda.
This morning, the IEC workers committee declared a labor dispute, after management withdrew NIS 350 million from the workers' free electricity and holiday gifts fund. IEC will use the money for part of the NIS 1.5 billion that it has promised to raise from its own sources as part of the bailout package, which aims to enable the utility to meet its commitments through June.
In June, IEC is due to raise NIS 3 billion in government-backed bonds. The debt offering is part of a NIS 6 billion offering to finance the purchase of fuel for the generation of electricity. On Thursday, the Public Utilities Authority (Electricity) approved an 8.9% electricity rate hike to help finance the fuel purchases.
Today's labor sanctions include halting work on the prospectus to raise NIS 4.5 billion on the capital market, and stoppages of coal unloading, hook-ups to the national grid, and the construction of a power station that is part of IEC emergency project.
In a plea to the workers, IEC CEO Eli Glickman said that the labor sanctions meant blackouts. He will later meet the workers committee's leaders to try and persuade them to cancel the sanctions.
Published by Globes [online], Israel business news - www.globes-online.com - on March 25, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012