In a blow to the Ministry of Finance, Israel Chemicals Ltd. (TASE: ICL), the sole bidder in the Eilat Port Company Ltd. privatization tender, today unexpectedly announced that it was withdrawing from the tender to acquire the port.
In a statement, Israel Chemicals said that it made the decision "after analysis and the learning the lessons from participation in the first tender, and the public response to that, and after concluding that any future participation by the company for the operation of the Eilat Port would have the same result as the first tender."
Israel Chemicals was the only company that submitted the NIS 15 million guarantee that the government set as a threshold condition for bidding for the Eilat Port. The three other finalists in the tender did not submit the guarantee, on the grounds that the NIS 100 million starting bid set by the government was unrealistic. The three companies were Gadot Chemicals Tankers and Terminals Ltd., owned by Yosef Maiman; Gold Bond Group Ltd. (TASE:GOLD), controlled by Shlomo Shmeltzer; and Papo Maritime Ltd., owned by the Nakash brothers.
Following criticism that Israel Chemicals was the sole participant in the tender, the Ministry of Finance decided to postpone the deadline for submitting guarantees to August 17, in order to try and persuade at least one other company to bid against Israel Chemicals.
Israel Chemicals, the only exporter through Eilat Port, exports through it 2.5 million tons of chemicals a year. For this reason, it was believed that the company would agree to pay a highr price than the other bidders to ensure that the port would fall into "unserious" hands. Israel Chemicals claimed that the government would sell the port for pennies if it cancelled the base price.
In its statement this morning, Israel Chemicals said, "In view of the fact that Israel Chemicals was prepared to pay the state the highest amount for the port, while presenting a business plan that would guarantee the existence, development, and thriving of the Eilat Port, while protecting the work conditions and livelihoods of the port's workers, it is reasonable to assume that Israel Chemicals will again be the only bidder in subsequent tenders. The decision to quit the tender was taken despite the certainty that there is no legal impediment, either in the area of antitrust or in the area of concentration, which would justify the prevention of Israel Chemicals' participation in the tender. We hope and believe that the export capabilities of Israel Chemicals from the Eilat Port will be possible in the future, because of the great importance of this export to Israel's balance of payments and Israel's exports to Asia, and in view of the importance of Israel Chemicals' activity to the continued functioning and existence of the Eilat Port in the future, and in view of the importance of Israel Chemicals as the largest employer in the Negev."
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2012
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