November 7, 2012 / 1:48 PM / 7 years ago

Israel Electric to sell more bonds as cash crisis deepens

JERUSALEM, Nov 7 (Reuters) - Cash-strapped Israel Electric Corp (IEC) plans a private offering of bonds this month to help it meet higher fuel costs.

IEC, Israel’s state-owned electric utility, said on Wednesday it will sell 1 billion shekels ($257 million) of non-traded bonds in the coming weeks backed by the government.

Israel’s Finance Ministry said it would provide immediate guarantees of up to 1 billion shekels to IEC to help it through its cash flow crisis that intensified after Egypt halted supplies of natural gas to Israel, forcing IEC to buy more expensive fuels such as diesel and fuel oil. Egypt had supplied 40 percent of IEC’s gas needs.

It noted that the guarantees were aimed at preventing further rises in electricity rates to consumers.

IEC, which has a cash flow shortfall of about 1.5 billion shekels, said it planned to sell another 2 billion shekels of bonds as early as December.

Raising 3 billion shekels should allow the company to meet its cash flow requirements through early March 2013, IEC said.

The company this year has so far raised 5.9 billion shekels in bond offerings that has brought its total debt to more than $16 billion.

IEC is expected to get a boost in mid-2013 when Israel’s large Tamar offshore gas field is due to begin production.

$1 = 3.89 shekels Reporting by Steven Scheer

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