Afcon commences NIS 1b Mobileye office project

Atalya Shmeltzer, president, Shlomo Group / Photo: Aviv Hofi

Afcon's share price fell 20% in the previous five trading days after the company reported a NIS 25 million third quarter loss.

Afcon Holdings, controlled by Shlomo Group, which was selected a year ago to construct Mobileye's new NIS 950 million offices and laboratories project in Jerusalem, will begin the work now, after the parties signed a revised agreement for construction of the project. Afcon stated that Mobileye "has an option to either extend or contract the extent of the work according to stipulated mechanisms," and that the final part of the project would take place in late 2022. Mobileye, which develops auto technologies, was acquired by chip giant Intel in 2017 for over $15 billion.

Afcon is planning to carry out the project as a turnkey project through a wholly-owned subsidiary. Following the positive news about the project, Afcon's share price was up slightly today, after having plunged nearly 20% in the five preceding trading days, following an announcement about disputes between Afcon and Intel about the offices and laboratories building that Afcon built in Petah Tikva and poor financial results subsequently published by Afcon.

Afcon's reports published last week showed a NIS 25 million loss in the third quarter, compared with an NIS 11 million net profit in the corresponding quarter last year. Afcon reported a NIS 15 million write-off in the buildings and infrastructure projects sector for the Intel project and a NIS 5 million write-off in the communications sector.

The write-off for the Intel project was posted "due to disputes with the party that ordered the work about the need to revise the contractual proceeds," as well as an NIS 8 million increase in expenses "resulting from speeding up the project." Afcon did not describe the state of the current project, but according to the timetable set for it, it should be in the final construction stages.

Published by Globes, Israel business news - en.globes.co.il - on December 3, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Atalya Shmeltzer, president, Shlomo Group / Photo: Aviv Hofi
Atalya Shmeltzer, president, Shlomo Group / Photo: Aviv Hofi
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