Bet Shemesh Engines wins $37m ITP deal

Bet Shemesh Engines Photo: Ariel Jerozolimski

Revenue from this and previous deals with Spanish company ITP Group is expected to top $100 million.

Bet Shemesh Engines Ltd. (TASE: BSEN) has notified the TASE of the extension of its long-term agreements signed in early 2016 with Spanish company Industria de Turbo Propulsores (ITP Group). The extension is projected to add $37 million to Bet Shemesh Engines' revenue in 2017-2029.

The extension brings Bet Shemesh Engines' revenue from the agreement to over $100 million. It includes six engine parts that the company will supply to ITP, which is now owned by engine giant Rolls Royce, and which is participating in a General Electric engine upgrade project.

Bet Shemesh Engines said, "Some of the work in this project will be carried out by the company's subsidiary in Serbia, which is likely to increase Bet Shemesh Engines' profit margin on this strategic project."

Bet Shemesh Engines concluded a $40 million long-term framework agreement with ITP in January 2016, with supply scheduled for 2016-2026. It was stated at the time that the agreement did not set a detailed supply timetable, and that specific orders were expected to arrive during the period of the agreement.

Eight months later, Bet Shemesh Engines announced the first extension of the agreement, amounting to an additional $29 million over 10 years. The company said that ITP was the world's ninth largest airplane engine company, with 3,000 employees. Rolls Royce acquired control of ITP in 2016.

Shaham leaves the company, still has a 10% stake

Bet Shemesh Engines, which manufactures jet engine parts and repairs and assembles jet engines, is controlled by Ishay Davidi's FIMI Opportunity Funds. FIMI acquired 43% of Bet Shemesh Engines' capital last summer for NIS 125 million.

CEO Avner Shaham, until recently, the controlling shareholder in the company, together with FIMI, sold most of his shares in the company in late 2016 to investment institutions for NIS 65 million, leaving him with a 10% stake worth NIS 42 million. After 25 years as CEO, Shaham announced in January that he would resign in April.

His replacement will be Ram Drori, who has been CEO of Arkal Automotive since 2009. In the past few days, the Bet Shemesh Engines shareholders approved the employment terms for Drori, whose remuneration is expected to total NIS 2.1 million in his first year as CEO, based on NIS 75,000 a month, rising to NIS 80,000 a month after a year.

Bet Shemesh Engines' market cap is NIS 460 million, after the company share price climbed 40% over the past year. As of November 1, 2016, the company's orders backlog totaled $200 million; it has since been upwardly revised by $62-82 million as a result of two additional deals.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 28, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Bet Shemesh Engines Photo: Ariel Jerozolimski
Bet Shemesh Engines Photo: Ariel Jerozolimski
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