Yossi Maiman
Photo: Haim Ziv
Infrastructure Fund cuts EMG evaluation
Reevaluation by Israel Infrastructure Fund 37% lower than appraisal from beginning of 2011 – $1.7 billion. Ampal opts for more moderate devaluation, appraising gas pipe at $2 billion
Israel Infrastructure Fund (IIF), under Yaron Kestenbaum, which heads the institutional consortium of investors in Egyptian East Mediterranean Gas along with Yossi Maiman's Ampal, advised investors on a reevaluation of EMG in which it gave the gas pipe a $1.7 billion price tag, Calcalist has learned.
At the end of 2010, the investment was reevaluated at only $2.7 billion whereas the valuation at the end of the first quarter was for just $2.1 billion – a 23% cut of the initial valuation on which the institutionals based their investment in the project in June 2007. IIF itself invested $12 million in the pipeline project.
IIF downgraded its valuation of EMG by 37% as compared with its valuation in its 2010 reports and by about 19% as compared with its valuation in the first quarter of 2011.
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The reevaluation comes in the wake of repeated disruptions in the Egyptian's pipeline's gas supply to Israel; however, to make the new price tag worthwhile, EMG must produce an annual profit of $200-300 million – an unlikely scenario under the current circumstances.
The Israeli investors which acquired 4.4% of the project at an overall $92 million, did not rely on IIF's evaluations and opted for more conservative estimates in their financial reports.
Menora Mivtachim Group, which invested $21 million in EMG, had long ago reevaluated its investment on a $1.4 billion value; the Phoenix, which invested $8 million in EMG, reevaluated the project on the basis of a $1.7 billion at the beginning of the year followed by another 30% write-off and presently reevaluates the investment at a $1.2 billion.
On the other hand, Psagot invested $11 million in EMG and left the Egyptian company's value in its books unchanged at $2 billion. Psagot has not yet received IIF's reevaluation report.
Ampal remains unmoved by the deterioration of ties with Egypt. In its recent reports, the company reported the same price tag for EMG - $2 billion after a miniscule devaluation of $17 million of the previous value
If Ampal reevaluates EMG on the basis of IIF's reevaluation, its equity capital, presently $164 million, might drop by as much as 25% (approximately $44 million).
Sources in Ampal claim that there is an essential difference between shareholders' valuation and a valuation on part of the company's controlling interest.
Click here to read this report in Hebrew
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