"Those who invest and are prepared to take risks must be optimists. No one has a crystal ball," Israel Corporation (TASE: ILCO) CEO Nir Gilad told "Globes" today in response to the collapse of Better Place Inc., and after publication of the company's financial report for the first quarter.
"Globes": Has the failed investment in Better Place changed your thinking about Qoros Auto Company Ltd.?
Gilad: "We're constantly rethinking processes. Better Place was an event that should be analyzed and studied for the future."
Gilad has been the target of a lot of criticism lately, ranging from Israel Corp's failed investments in Better Place, Zim Integrated Shipping Services Ltd., and Oil Refineries Ltd. (TASE:ORL), through his remarks about the higher royalties levied on Israel Chemicals Ltd. (TASE: ICL), Israel Corp's main asset, to his huge salary that is disproportionate to the company's performance.
Has the time come to draw personal conclusions?
"My efforts and that of my longstanding team are complicated and huge by any dimension. It is the owners and directors who have to decide every day. They clearly show their satisfaction. Nonetheless, we're not immune from mistakes. In general, those who do nothing do not err. If entrepreneurship focused only on sure things, our world would look far worse."
"I am very proud of what my team and I are doing under the leadership of the board of directors headed by Amir Elstein and Idan Ofer. Israel Corp. is one of the most stable and growth-focused companies in the Israeli economy, building a power station in the Negev, Oil Refineries' hydrocracking plant, desalination plants, investments in Israel Chemicals, and so on, are evidence of this. We are focused on action and we're also alert to criticism. At the end of the day, you have to be fair and see how we got through the past few years and the soundness we've demonstrated. This is one of the most stable and liquid companies in the economy, and it continues to invest in growth."
Gilad, it seems, is more involved in Israel Chemicals nowadays, especially in view of the public demands that it pay higher royalties on natural resources, a demand which unsettles the company's executives. "Things are happening here, which at the executive level, undermine part of the foundations on which the business world rests. Just a year ago, we signed an agreement with the state to increase royalties and financing the salt harvesting in the Dead Sea. The ink has not even dried and some people think the agreement should be set aside.
"We have a responsibility to our employees and shareholders, most of whom are the general public through provident and pension funds and whose voices are not heard. We think that these decisions are liable to cause an unnecessary devastating blow which has little chance of being corrected in the future."
During Gilad's tenure, Israel Corp's share price has underperformed the Tel Aviv 25 Index and Israel Chemicals. He says, "One of the main unknowns in our opinion is the difference between Israel Corp's market cap and the value of its liquid assets. In this context, you should examine external factors: the power of negative sentiment in the market, the prevailing regulatory uncertainty in the market, and most importantly, the almost complete lack of liquidity. A NIS 4.5 billion company with a daily turnover of less NIS 20 million - that is not trading."
In view of Zim's financial problems and its talks with the credit banks on a new business plan, Gilad has met the creditors and bondholders to discuss changes in its debt structure. "We're in talks with the parties on a new five-year plan, which will include changing Zim's debt structure. It has been presented to all the relevant parties: the banks, bondholders, and shipyards. We hope to complete the talks in the second half of the year, and we'll have an updated plan for 2014=17," he says.
"There are conditions for Zim's continued growth, such as the widening of the Panama Canal. We've said that if there is such a growth plan, it will require procurements. This is where we'll consider helping the company in a big way, but it's dependent on additional external financing by some of the players. I cannot comment on the numbers. We're working on a work plan and so long as the first step is not solved, we cannot talk about the second step. At the moment there is no plan for another capital injection, but there is willingness to participate in the future."
Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2013
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