Management upheaval at IEC continues

Chief financial officer resigns over refusal to sign prospectus.

Avner Yehudai, the Israel Electric Corporation's chief financial officer has resigned over a dispute regarding changes to the publication of the company's prospectus to raise billions of shekels in capital. "At the end of the company's board of directors meeting (on Wednesday night) at which sources of financing including further raising of capital were discussed, Yehudai announced his resignation," the IEC said in a statement on Thursday. "The board discussed changes that were made to the explanations of the prospectuses as presented by the IEC and resolved the dispute between the Government Companies Authority and members of the board of directors." Only last month, Uri Ben-Noon, resigned as CEO of the IEC, following months of disagreements with the government and board over the reform of the electric company. According to sources close to the company, Yehudai, who was considered to be a candidate to take over as CEO, refused to sign the company's prospectus for raising about NIS 1 billion in bonds and a shelf offering of up to NIS 10b., due to the GCA's demands for changes in the wording of certain explanations in the prospectus, which he believed would not present the full picture of the company's situation to investors. "At this point, I decline to comment on these issues, which will be explained in an official statement released on Friday," Yehudai told The Jerusalem Post. On the other hand, the GCA is understood to have argued that the clauses included in the prospectus were exaggerated conveying, for example, that the IEC's restructuring reform depended upon the agreement of employees, which would misguide investors since the government, in any case, was obligated by law to implement the reform as planned. Another clause that raised objection from the GCA stated that electricity price tariff decisions forced upon the company by the regulator for a 5 percent hike would threaten the IEC's financial results. The IEC had been calling for electricity tariffs to be increased by between 10% and 15%, on average and, prior to the authorization for a 5% tariff increase, had threatened not to authorize any further raising of capital without a substantial tariff hike. In the past, the IEC has failed to raise capital at the prices and amounts put forward in its prospectus.