Sources inform ''Globes'' that unmanned aerial vehicle (UAV) maker Aeronautics Ltd. has not paid October salaries. In a notice to employees, Aeronautics founder and CEO Avi Leumi and chairman Eitan Bar-Eliahu said that the salaries would be paid soon.
The company has also fired another 30 employees, after firing 60 employees, a tenth of its workforce, in October. The company now has fewer than 600 employees at its premises in Yavne and Jerusalem.
Aeronautics is set to be taken over by private equity fund KCPS & Co. and Bereshit debt recycling fund, which last year invested over $35 million in the company through shares and convertible loans. Aeronautics is in breach of its financial covenants, due to its liquidity problems.
Bereshit and KCPS will convert their loan into Aeronautics shares, and together with Viola Private Equity, which owns 7% of Aeronautics, will become its controlling shareholders. Aeronautics' previous largest shareholders, Avi Shaked and the heirs of his late brother, Aharon, will become minority shareholders, and Leumi and his partner, Moshe Caspi, will be left with small stakes.
Leumi was supposed to vacate his position as CEO early this year, and the company set up a search committee to find a successor. The committee nominated two candidates, but, for various reasons, the change in management never took place. The private equity funds are expected to appoint a new CEO after they take over the company.
In 2011, Aeronautics was Israel's fifth largest defense company. In early 2012, Aeronautics and Rafael Advanced Defense Systems Ltd. jointly acquired Controp Precision Technologies, a manufacturer of electro-optical systems for UAVs, at a company value of NIS 300 million. 2010 was Aeronautics' peak year, with $160 million revenue, but revenue subsequently slumped and it posted a loss in 2011.
Aeronautics is also embroiled in a dispute with Poland, after it cancelled a $30 million contract for UAVs, on the grounds that the company missed the deadlines for deliveries.
Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012