Oil Refineries Ltd. rose the most in more than four years after the loss-making manufacturer of refined crude products announced a plan to boost earnings and raise funds.
The shares jumped 12 percent, the steepest gain since May 2009, to 1.06 shekels at the close in Tel Aviv. Trading volume was more than seven times the three-month average, data compiled by Bloomberg show. The stock is the worst performer on Israel’s TA-25 Index this year with a drop of 47 percent, after posting losses in each of the past eight quarters. The benchmark gauge fell 0.8 percent today, paring the week’s 0.3 percent advance.
The refiner plans to improve net income by cutting costs, a move that may generate an additional $100 million in annual operating profit during 2014, according to statement to the Tel Aviv bourse. The company will also hold a rights offering for as much as $150 million in the second half of December and majority owner Israel Corp. may take part in the fundraising, it said.
“This is an attempt to inject funds into the company’s coffers until refining margins will improve,” Sharon Naveh, head of institutional and international sales at Migdal Capital Markets Ltd. in Tel Aviv, said by phone. “This is also a good opportunity for Israel Corp. to increase its stake in in the company at a comfortable price.”
Oil Refineries said it is also in talks with banks to increase the availability of funds, enabling the company to meet its debt commitments. The refiner’s shares have slumped 23 percent since Calcalist reported on Oct. 3 that bondholders will request a cash injection from shareholder Israel Corp. to meet imminent debt obligations.
Earlier this week, Standard & Poor’s Maalot lowered Oil Refineries’ rating to IlBBB- from IlBBB+, citing poor operational performance. The company is scheduled to repay $165 million of debt in the second half and about $330 million next year, S&P said in its report.
Israel Corp., which has a 37.08 percent stake in Oil Refineries, declined 1.3 percent to 1,801 shekels. The yield on the refiner’s 4.6 percent bonds due June 2015 plunged 383 basis points.
BP Plc’s refining market margin, a benchmark indicator for global processing profits, slumped 30 percent to $13.60 a barrel in the third quarter, according to the company’s website.