Phoenicia America-Israel (Flat Glass) Ltd. yesterday petitioned the Nazareth District Court for a stay of proceedings, as rising energy and raw materials prices, coupled with aggressive competition in its export target market and falling demand pushed the company into severe cash flow distress. The court appointed Chen Bardichev CPA as trustee to manager the company for 30 days. Phoenicia owes its creditors, mostly banks and suppliers, NIS 325 million.
Phoenicia, based at the Tziporit industrial zone in Upper Nazareth, has 400 employees, mostly from Haifa and minority towns in the Galilee. It is owned by US glassmaker Guardian Industries Inc. of the US, and run by chairman and president Oded Tyrah, who served as president of the Manufacturers Association of Israel in 1999-2005.
The glassmaker was founded in 1934, and its current core business is the manufacture of flat glass used in skyscrapers and other buildings. Two years ago, it invested $60 million in a new plant to break into the solar panel market, which uses high-quality flat glass sheets. Tyrah told "Globes" at the time that this business would generate $120 million revenue a year, and expand the company's global business.
It didn’t.
The global economic slowdown has hit the solar farm industry and its need for glass panels for solar receptors, while surplus output caused prices to plummet. The crisis in the Eurozone and in core markets further reduced demand. 80% of Phoenicia's production is for export, and its core markets are Greece, Spain, Turkey, and Germany.
In its urgent petition for a stay in proceedings, Phoenicia said that it cannot meet it current liabilities on time, stating, "The cash flow distress puts the company at risk that legal and bailiff's proceedings will be opened against it. As of today, the company does not have sufficient cash flow sources to meet its regular payments to suppliers, and a creditors' settlement is essential before the company's condition deteriorates. A stay in proceedings is essential for achieving the industrial quiet necessary to implement its recovery plan, draw up a creditors' agreement, or find an investor."
Phoenicia's turnover was NIS 300 million in 2011; not enough to overcome its cash flow shortfall. Guardian Industries injected NIS 66 million into the company over the past few months, which enabled the company to keep its complex and costly production line open.
Now that the stay of proceedings has been granted, Guardian Industries plans to inject an additional NIS 28 million into Phoenicia to continue operations for another month. Phoenicia says that its glassmaking kiln costs NIS 1 million a day to operate. The kiln operates 24/7, producing 1,300 degrees Celsius, and shutting it down is an expensive and dangerous operation that takes weeks.
Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2012
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