Oil Refineries Announces Cost Cutting and Other Updates
HAIFA, Israel, October 17, 2013 /PRNewswire/ --
Oil Refineries Ltd. (TASE: ORL.TA) (hereinafter "the Company,""ORL"), Israel's largest integrated refining and petrochemical group, announced that pursuant to the Company's announcement of October 8, 2013 and the low refining margins that exist in Europe and the Mediterranean region, which have negatively impacted on the Company's profitability, cash flow and liquidity, the Company announces, following a meeting of its Board of Directors on October 17, 2013, as follows:
- Management and employees' representatives are jointly formulating a cost costing and streamlining program, including the reduction of headquarters and use of outside service providers, and the reduction of labor costs. In the opinion of the Company, implementation of the above program together with other measures to improve profitability that are being implemented within the Bazan Group, should add about USD 100 million during 2014 to the Company's annual operating profit.
- During the second half of December 2013, the Company intends to carry out a rights issue for the purchase of the Company's shares of up to USD 150 million.
The Company has received an announcement from the Israel Corporation Ltd, one of the Company's controlling shareholders, whereby the Israel Corporation will positively consider participating in the rights issue and purchasing ORL shares, if ORL proceeds to raise capital through a rights issue. This is subject to adoption of a streamlining program, cooperation by the banks with ORL, and Israel Corporation's assessment of the issue terms, all subject to discussion and approval by the Board of Directors of Israel Corporation.
- The Company is taking steps to increase its liquidity and to expand its sources of credit, and is in contact with the banks in order to ensure the continued provision of its credit requirements.
The full operation of the hydrocracker and optimal utilization of natural gas for the Group's energy requirements are consistently providing the Company with refining margins that are materially higher than the benchmark margin and support the Group's ability to repay its borrowings even in a context of low margins. These facts together with completion of the measures enumerated above will, in the Company's opinion, ensure the Company's continued ability to meet its existing obligations and those expected at maturity date.
The Company's opinion above is a forward looking statement and is based on the Company's assessment of its ability to realize the steps described above and to improve its profitability and cash flow, on the announcement of the Israel Corporation and on the contacts the Company is holding with its bankers. A material change to any of the Company's assessments concerning its ability to improve its profitability and liquidity due to an absence of agreement by third parties whose agreement is required or as a result of changes in market conditions or for any other reason, non-fulfillment of the terms for implementation of the Israel Corporation announcement, or failure in contacts with the banks, may cause this assessment not to be fulfilled.
This notice is a convenience translation of the Hebrew announcement - the only binding version is the Hebrew version, as published in the Internet sites of the Tel-Aviv Stock Exchange and the Israeli Securities Authority.
About Oil Refineries Ltd.
Oil Refineries Ltd. (ORL), located in the bay area of the city of Haifa, operates Israel's largest integrated refining and petrochemical group. It is one of the leading refineries in the Eastern Mediterranean area and integrates, on-site, petrochemical businesses. ORL runs sophisticated and state-of-the-art industrial facilities with a refining capacity of 9.8 million tons of crude oil per year and a Nelson Complexity Index of 9, providing a variety of quality products used in industrial operation, transportation, private consumption, agriculture and infrastructure. Besides production of fuels, the company produces in its wholly owned subsidiaries Polymers (through Carmel Olefins Ltd), Aromatics (through Gadiv Petrochemical Industries Ltd), and Lube-Oils (through Haifa Basic Oils Ltd). The Company's shares are listed on the Tel Aviv Stock Exchange under the ticker ORL. For additional information please visit http://www.orl.co.il.
ORL is controlled by the Israel Corporation Ltd. and Israel Petrochemical Enterprises Ltd., both public companies whose shares are traded on the Tel Aviv Stock Exchange.
Chief Economist and Head of Investor Relations
Investor Relations Contact:
Ehud Helft / Porat Saar
Tel. (US) +1-646-233-2161 / (Int.) +972-52-776-3687
SOURCE Oil Refineries Ltd