Oil Refineries Ltd. (ORL) slid to the lowest in more than three years on concern the Israeli producer of refined crude oil products won’t meet debt commitments.
The shares lost 6.9 percent to 1.23 shekels, the weakest level since March 2009, as of 2:36 p.m. in Tel Aviv, bringing the three-day drop to 12 percent. Trading volume was more than triple the three-month daily average, data compiled by Bloomberg show. The stock was the biggest decliner on a percentage basis in the benchmark TA-25 Index (TA-25), which fell 0.5 percent.
Bondholders of the loss-making company will request an injection of funds from majority owner Israel Corp. to meet imminent debt obligations, Calcalist reported last week. The holders are worried Oil Refineries will have to abide by its guarantee for as much as $135 million given to its Carmel Olefins Ltd. unit, according to the newspaper. The subsidiary is able to “fully service its debt with its own resources,” the refiner said today in an e-mailed statement to Bloomberg.
“There are concerns about a debt settlement and that is what is pushing the shares down,” Sharon Naveh, head of institutional and international sales at Migdal Capital Markets Ltd., said by phone.
Oil Refineries has declined 26 percent in the past 12 months, compared with a gain of about 4 percent in the TA-25. Standard & Poor’s Maalot in June gave the refiner a negative outlook and a rating of ilBBB+, citing “less than adequate” liquidity and “very high” leverage levels. The company will face debt obligations of $295 million in 2014, according to S&P.
The refiner has posted losses in the past eight quarters and hasn’t reported an annual profit since 2010, according to data compiled by Bloomberg. Israel Corp., which has a 37.08 percent stake in Oil Refineries, has declined 24 percent in the past 12 months, with the shares slipping 1 percent today.
Israel Petrochemical Enterprises Ltd., the second-biggest shareholder with a stake of almost 31 percent, tumbled 9.9 percent, the steepest retreat since Aug. 27. The producer of polyethylene and other raw materials said in July it would delay payment of principal due in August. Its bonds were put on credit review at Moody’s Midroog in June.
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