Israel Corp. (TASE: ILCO) subsidiary Oil Refineries Ltd. (TASE:ORL) today responded with fury at the downgrade of its bonds by Standard & Poor's Maalot Ltd. to A/negative from AA/stable.
In a press release, Oil Refineries said, "Oil Refineries wishes to stress that this was an astonishing act by Maalot, since when the bonds were issued in December 2007, which Maalot rated AA/stable, the company and Maalot took into account the company's investment outlook for the coming years in the framework of the company's strategic plan. Accordingly, the bond terms stipulate that most repayment will begin in 2012, when the company expects to receive substantial cash flow from the investments."
Oil Refineries added, "The company has reservations about Maalot's report, because on the basis of its figures, there has been no deterioration in its free cash flow and in its financial soundness compared with its situation at the time of the previous rating."
Oil Refineries has three marketable bond series and one non-marketable bond series, which are the subject of the Maalot downgrade. The three marketable bonds, Series A, B, and C, total NIS 1.82 billion, whereas their current market value is NIS 1.68 billion, resulting in a discount of 7.6%. The three bond series are linked to the Consumer Price Index (CPI) and bear 4.6-6% interest a year, and mature between 2.35 and 6.93 years.
Oil Refineries' share fell 8% to NIS 1.37 by early afternoon, giving a market cap of just under NIS 3 billion. Israel Corporation's share fell 6.8% to NIS 1,420.
Published by Globes [online], Israel business news - www.globes-online.com - on November 13, 2008
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