Israel Electric eyes up to NIS 1.5 billion of state-guarantee bonds

By Angela McDaniels

Tacoma, Wash., March 22 - Israel Electric Corp. Ltd. plans to raise up to NIS 1.5 billion by issuing non-negotiable debentures or securing new bank loans, and it has successfully negotiated with the Israeli Ministry of Finance to receive a state guarantee of the new debt, according to a company announcement.

On March 1, the company said it will not be able to purchase all the fuel it needs without governmental assistance. It blamed the continuing decrease in the volumes of natural gas supplied to the company from the Yam Thetys reservoir, the continuing disruptions in the supply of natural gas from Egypt and the company's need to increase its reserves of fuel as the summer months grow nearer.

The proceeds of the debentures or loan will be used to cover the excess cost of the fuels mix in the years 2011 through 2013.

The new debt is part of a series of steps proposed by the Ministry of Finance and approved by the company's board of directors. Among other actions, the company will postpone NIS 200 million of tax deductions that it owes and act to postpone payments and implement other internal solutions that will total NIS 500 million to NIS 1 billion.

The issuance of the debentures and/or obtaining the loan remain subject to the receipt of regulatory approvals.

Israel Electric is a Haifa, Israel-based publicly controlled utility.

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