Banks grant sportswear company credit extension

Banks grant sportswear c

tefron sportswear 248.88 (photo credit: Courtesy of Tefron)
tefron sportswear 248.88
(photo credit: Courtesy of Tefron)
Debt-ridden Tefron Ltd. has received a three-week extension of credit from banks so that the textiles manufacturer can stay in business. Tefron officials met with representatives of Bank Leumi, Israel Discount Bank and Bank Hapoalim on Thursday. The banks agreed to uphold the company's credit framework until the end of the year. In exchange, Tefron agreed to provide the banks with a detailed recovery plan for 2010 by the end of December. "If the banks don't approve the business plan and cancel our credit frameworks, the company's continued operations will be at risk," Tefron said in a statement to the Tel Aviv Stock Exchange. The banks provided Tefron with a total of $29 million in credit as of the end of this September. Galilee-based Tefron also has operations in Jordan and the Far East. It focuses on the manufacturing of sportswear and intimate apparel. The TASE suspended trading of Tefron shares Thursday morning because of uncertainty regarding the company's future. Trading was resumed in the afternoon, and Tefron shares closed down 12 percent at a record low of NIS 10.98. Tefron started trading on the TASE in September 2005. Revenues at Tefron, which is controlled by First Israel Mezzanine Investors Fund (FIMI) and Mivtach Shamir Holdings Ltd., have plunged over recent quarters as two of its main clients, Victoria Secret and Nike, stopped placing big orders. This past February, the company announced an efficiency program in an effort to cut costs, including the reduction of its workforce by 15%. The company's net loss rose to $8.3m. for the third quarter, while revenue fell 45% to $21m. from $38.3m. The company lost $12.7m. in the January-September period. Operating loss rose to $9.3m. for the third quarter from $7.1m. for the corresponding quarter of 2008. Sales fell 33% to $93.3m. in January-September from $137.9m. in the corresponding quarter of 2008. Last week, Molitan Ltd., a sewing and embroidery thread manufacturer based in Nahariya, reportedly had liquidity problems and was at risk of closing down because of debts owed to Israel Discount Bank and Bank Leumi. Molitan employs about 80 workers at its factory, including 50 new immigrants, out of whom 30 are single mothers. "There is great concern [over the number of] factories on the verge of closure that employ new immigrants," Immigrant Absorption Minister director-general Dimitri Aperchev said Thursday. "As a society and a country, we need to make every effort to protect factories such as Molitan, which are providing employment for hundreds of new immigrants, especially in the periphery, and are fulfilling their Zionist dream," he said.