Figures obtained by "Globes" show that bookseller Steimatzky Ltd. is losing tens of millions of shekels a year, has a deficit of NIS 166 million, and more than NIS 350 million in debts. Belying the company's statements that it has an operating profit, the figures show that it actually has an operating loss.
The latest figures come on top of "Globes'" revelation that Steimatzy has stopped paying publishers. The company lost NIS 36 million in 2012 and NIS 48 million in 2011, for a total loss of NIS 84 million for the two years. Sales totaled NIS 390.9 million in 2012, 2% less than in 2011.
Steimatzky insists that it is has an operating profit, but the figures show otherwise. Operational, administrative and general, and marketing expenses totaled NIS 181.2 million in 2012, exceeding its gross profit of NIS 176.2 million, resulting in an operating loss of NIS 4.9 million.
Steimatzky's owner, Markstone Capital Partners Group LLC, is making frantic efforts to find an investor for the bookseller. Sources inform ''Globes'' that it has approached several businessmen to inject NIS 5-15 million into the company in exchange for a lien on its shares. There have been no buyers.
Steimatzky's figures, revealed for the first time today, and the size of its debt, suggest that it might be sold. It is no secret that when a financially struggling company's problems are revealed, not only has the damage been done, but potential buyers prefer to wait for a stay in proceedings, when they can buy it for pennies without assuming the debts and liabilities. Business sources say that Steimatzky's debts are a millstone weighing on a potential sale.
Sources close to Steimatzky told "Globes" today that its main problem is heavy financing costs related to Markstone, which bought the company from its founder, Ari Steimatzky for $55 million in 2005.
At the end of 2012, Steimatzky owed Bank Hapoalim (TASE: POLI) NIS 151.6 million, and is paying 2.5-6.9% interest on the debt. In 2011, the bank classified the debt as "problem debt". The sources say that the debt has since fallen to NIS 137 million. At the end of 2012, it owed Markstone NIS 209.5 million, and pays 4.6% interest on the debt. This debt is reportedly unchanged as it was agreed in advance that Markstone would not call in the debt before January 2014.
Steimatzky has 134 stores, two of which are operated by franchisees.
Steimatzky said in response, "In the shadow of the terrible tragedy that befell Markstone's CEO and Steimatzky's chairman, Markstone notified the Steimatzky that it is restructuring and that it is dealing with all matters as quickly as possible. The company has always paid its suppliers on the 5th or the 20th of each month, and salaries are paid in full on time. We believe that the suppliers trust in the company's management. Steimatzky had an operating profit in 2012 and 2013. Beyond that, we advise not listening to rumors and speculation."
This evening Steimatzky said that Markstone had injected NIS 10 million into the chain so that suppliers can be paid.
Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2014
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