Tnuva Devaluation Setback for Chinese Owners

Israeli banks that provided financing for Bright Food’s purchase of Tnuva are seeking tougher terms in negotiations for a recycled loan after a major devaluation of the food company, Globes said on Thursday.

The Chinese owners of Israel’s flagship food producer are facing demands from Bank Hapoalim, the chief backer of the deal, for higher shareholders’ equity, additional collateral, and a likely raise in the interest rate on the 2-billion-shekel loan.

A valuation conducted by the consultancy TASC revealed that Tnuva has lost more than 40 percent of its value since the deal went through eighteen months ago. The current valuation is NIS 4.5-5 billion, compared to last year’s valuation of NIS 8.6 billion.

Officials at Bright Food were reportedly angered by disclosures about the revaluation and have even threatened to sue the banks because of the leaked information.

Profits have slumped for various reasons, including greater competition in the milk and soft cheese market and new price controls on cream.

A streamlining program featuring manpower cuts has yet to get started. Management changes have also hampered performance, with veteran CEO Arik Schor leaving because of conflict with Bright Food, to be replaced by Eyal Malis.