Will Agrexco's woes repeat themselves with the Israel Postal Company Ltd.? In light of the Post Office's huge losses, which are being revealed for the first time today, concerns are arising over whether the government company is capable of meeting the bond payments.
Granted, the Post Office did not officially publish its 2010 financial report, however, sources inform "Globes" that the company lost NIS 100 million in 2010. The sources believe that the Post Office will lose NIS 80 million in 2011, yet during these two years, the company still maintained a positive cash flow.
Next April, the Post Office will begin paying the principal on its NIS 400 million bond issue to institutional investors in 2010. These payments total NIS 60 million each year, with inflation raising the interest payments. The Post Office reportedly has sources to meet the bond payments in 2012, however in light of its losses over the past two years, concern is growing about its ability to meet subsequent bond payments.
"If the Post Office does not receive assistance from the Ministry of Finance, 2013 will be problematic," a source said. However, some of the financial institutions that bought the bonds are not particularly concerned, and believe that the government will stand behind the company if it becomes necessary. "This is a government-owned company, and the government wants to turn the Post Office Bank into a commercial bank. There is no reason to be concerned," said a senior executive of a large financial institution.
Sasi Shilo is the Israel Postal Company chairman, and Haim Almoznino is the CEO. They are both new to their positions - Shilo was appointed chairman at the end of 2010, and Almoznino, former deputy CEO of Delek Israel Fuel Corporation Ltd. (TASE: DLKIS) took up his post only in May, succeeding Avi Hochman, who is now managing B. Gaon Holdings Ltd. (TASE: GAON).
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