The 82% plunge in the share price of Suny Electronics Ltd. (TASE: SUNY) in 2011 pushed Tao Tsuot Ltd. (TASE: TAO-M), controlled by Ilan Ben Dov to a loss of NIS 124 million for the year. The company's cumulative loss for the past few years has reached NIS 850 million, and its shareholder's equity deficit deepened to NIS 490 million. The company's auditors have appended a going concern warning to their report.
Due to the catastrophic situation, Tao continues to warn that there is a danger of demands for immediate repayment of its NIS 600 million debt. Last week, Tao's troubles with the banks reached a position in which Bank Leumi (TASE: LUMI), Tao's main lender, has forbidden it to use its cash and cash equivalents on which the bank has a lien. Tao's NIS 420 million bond debt is also at risk, since without Bank Leumi's approval of the debt settlement that the company offered a few months ago, the settlement cannot be executed.
Tao owns 7.4% of Suny, which Ben Dov also controls, and through which he controls Orange franchisee Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). Tao made a NIS 79 million write-down on its Suny holding in 2011, but still books the holding at a value of NIS 75 million - almost four times its market value.
Due to the losses, Tao executives, including CEO Yossi Arad, received no bonuses last year. The aggregate salary cost of the company's management was almost NIS 2 million in 2011, including NIS 708,000 in management fees and the cost of a car for Arad.
Trading in Tao's shares is restricted. Its share price is NIS 0.05 today, giving a market cap of NIS 17 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2012
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