Stock Frequent garden Traded on the stock exchange today (Sunday) with a sharp rise of about 50%, after the company reported a framework agreement signed by the subsidiary, Ortal, with a new client. Under the new agreement, Ortal was appointed as the exclusive supplier of a magnesium component intended for an electric vehicle of the Audi company from the German Volkswagen Group.
The scope of the framework agreement is about $ 15 million (NIS 47 million) for a period of five years. Under the agreement, Ortal will manufacture magnesium assemblies for Audi-made electric vehicles, which are expected to go into series production during the first half of 2022.
Eran Tibon, CEO of Tadir Gan, stated that he is proud to add Audi to the list of car manufacturers that use Ortal products. “Ortal products have been used by leading car manufacturers such as General Motors and Mann for many years and the addition of a manufacturer from the Volkswagen Group is an important step for us.” .
Tibon added that “this agreement is of special importance due to its being intended for use in electric vehicles. The transition from fuel-based vehicles to electric cars in which the sensitivity to vehicle weight is high, increases the attractiveness of Ortal products because magnesium is a low specific gravity material and we believe other electric vehicle manufacturers will choose to For use in magnesium components. “
Tadir Gan has over 30 years of experience in supplying mechanical assemblies to the automotive industry. The subsidiary Ortal Magnesium Castings specializes in the production of magnesium assemblies in pressure castings for the global automotive industry. All of the company’s products are exported to automakers in the United States and Europe.
In July 2021, the DBSI-Brin Group, which is owned by Barak Dotan and Yossi Ben Shalom, became the controlling owner of Tadir Gan, after receiving the controlling shares (54.61%) in the company from the Pimi Fund free of charge. As part of the transaction, it was determined that DBSI and Brin will pay Pimi funds a contingent future consideration, according to a mechanism set forth in the agreement and the sale, which is based on a percentage of the receipts that will accrue to the purchasers after their return on investment in the company.
The purchasers’ obligation to pay the contingent consideration will be valid for 10 years from the date of completion and is limited to a maximum amount of $ 10 million. In addition, the purchasers provided Tadir-Gan with an owner loan of NIS 4 million for the purpose of repaying bank debts.
Immediately after its acquisition by the DBSI-Brin Group, Tadir Gan began recovery and growth proceedings, in which it repaid, among other things, its full bank debt (as part of a comprehensive bank arrangement). In September this year, Tadir Gan reported that it had signed a debt arrangement with its financing banks – Hapoalim, Leumi, Discount and International International.
As part of the arrangement, the company repaid the banks an amount of NIS 8.45 million, which constitutes 50% of its total debts to them, while the banks agreed to forgive the other half of the debt. In addition, as part of the arrangement, the banks also received warrants that can be exercised for 5% of the Tadir-Gan shares, after the allotment.
Barak Dotan, chairman of Tadir Gan, said today that “I would like to thank the company’s dedicated staff and first and foremost the company’s CEO, Eran Tibon, for adhering to a goal that has led to the recognition of Tadir-Gan capabilities by a giant corporation like Volkswagen. “Gan faced complex challenges, but knew how to face them. We recently acquired control of the company and I am pleased to announce that the agreement to supply the assemblies for Volkswagen vehicles is an important link in the chain of recovery moves we are promoting in the company and we believe more agreements will follow.”
The corona has affected the company’s customers
Since 2016, Tadir-Gan has been suffering from a deterioration in its situation, and as a result, its auditors have included a live business note in the Tadir-Gan financial statements as of December 31, 2016. The live business note did not appear in the 2020 annual report, but drew attention to The company, in view of its ongoing losses.
The deterioration in her condition even led Tadir Gan to abandon in 2018 the former subsidiary, ADB, which operates in Germany. Tadir-Gan then incurred a loss of about $ 18 million as a result of ADB’s discontinued operations, but even then, when its operations remained only in Israel, the company found it difficult to recover.
In the years 2018-2020, Tadir-Gan recorded a total operating loss of $ 5.8 million, and a net loss of $ 24.64 million, which was largely due to the termination of the subsidiary’s operations in Germany. In 2020, Tadir-Gan also suffered a 31% drop in revenue to only $ 17.9 million, which according to the company was mainly due to Corona’s effects on the company’s customers. “The decrease in sales in the magnesium field is due to the spread of the corona virus to 2020, which caused a decrease in the volume of the Group’s orders,” the board’s report for the 2020 summary said.
Tadir-Gan ended the first half of 2021 with a 5.5% increase in revenue to $ 10.1 million, but also with a 43% decrease in cash flow operating profit (EBITDA) to $ 553,000, due to a 15% increase in material prices The raw material during this period, along with an increase in electricity expenses. The bottom line is the company reported a net loss of $ 3.15 million in the first half of 2021, which was largely due to one-time expenses of $ 2.5 million.
These non-recurring expenses included a provision for legal proceedings in the German bank financing lawsuit against the former subsidiary ADB, as well as for the deletion of Tadir-Gan’s technical inventory. As of the end of June 2021, Tadir-Gan presented a negative equity (capital deficit) of $ 2.2 million. Following the announcement today, the company’s share jumped by about 60% and the company’s value climbed to NIS 55 million ($ 17 million).