Sources inform ''Globes'' that Eden Springs (Mayanot Eden Ltd.)(TASE:MEYD), controlled by the Naftali family, has been considering in recent days securitizing some its anticipated cash flow over the next two years from the completion of its deal with Groupe Danone (NYSE:DA; XETRA; Paris:DANO). Eden Springs wants to lower its current financing costs by securitizing cash flow to be received from the final stage of the Danone deal.
Under the original contract, Danone was due to acquire Eden Springs’ stake in their joint home/office delivery (HOD) venture Danone Springs of Eden for €245 million, at a company value of €740 million. This figure was not final, but contingent on Danone Springs’ performance in early 2008. Consequently, the full amount cannot be securitized. Capital market sources believe that Eden Springs is considering securitizing $50-70 million of its current liabilities, and repaying part of its bank debt, which totaled NIS 634 million at the end of the first quarter of 2005.
Danone recently wrote off €150 million on its bottled water business in Europe, as part of a €600 million write-off made by Danone on its global bottled water business. Eden Springs’ financial report for the first quarter of 2005 indicates improvement in its European activities. Eden Springs currently owns 41.3% of Danone Springs, whose losses in recent years caused Eden Springs to post a NIS 100 million net loss in 2003-04.
When Eden Springs published its first quarter financial report, CFO Gad Cunia predicted that Danone Springs would generate €185 million in revenue in 2005, and would make an EBITDA (earnings before interest, taxes, depreciation and amortization) operating profit margin of 5%. “I predict that the European venture will make a net profit in 2006,” he said.
Eden Springs said, “As part of our normal business, we periodically examine financing alternatives in order to lower our financing costs. At this stage, no decision has been made to make any change in the group’s liabilities.”
Published by Globes [online], Israel business news - www.globes.co.il - on July 18, 2005