Oil Refineries Ltd. (TASE:ORL) today announced a recovery plan, which includes a $150 million rights issue. "Management and the workers committee are jointly drawing up a plan to cut costs and streamline, including reductions in staff, reduced use of service providers and outside sources, and lower work costs," said the company in a notice to the TASE.
Oil Refineries estimates that the streamlining plan will cut operating costs by $100 million a year from 2014.
In December 2013, Oil Refineries will hold a rights issue. Israel Corporation (TASE: ILCO), one of the company's two controlling shareholders, with a 37.1% stake, has already announced that it will favorably review participating in the rights issue, subject to Oil Refineries adopting the streamlining plan and cooperation by the banks on the terms of the issue. Israel Corp.'s board of directors will have to approve the company's participation in the issue.
Oil Refineries' other controlling shareholder, Israel Petrochemical Enterprises Ltd. (TASE:PTCH), which owns 30.7% of the company, has not yet announced its intentions about the rights issue.
Oil Refineries added, "The company will continue measures to increase its liquidity and diversify its credit sources. It is in regular contact with the banking system to guarantee the continuation of its credit line."
"Full operation of the hydrocracking plant and maximizing the use of natural gas for the company's energy needs, consistently creates for the company a refining margin that is substantially higher than the benchmark margin. It also supports the company's ability to repay its debt, even in a low profit environment, especially when the abovementioned measures are completed, and will ensure the company's continued ability to meet its current and expected liabilities when the time comes to pay them," concluded Oil Refineries.
Oil Refineries' share price has lost over a quarter of its value in the past week, in view of its financial troubles. Its current market cap is NIS 2.3 billion ($653 million).
Published by Globes [online], Israel business news - www.globes-online.com - on October 17, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013