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Third time's the charm?

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midastouch017   Sunday, 09/18/05 09:29:43 AM
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Third time's the charm?
14.9.2005 | 09:37
Ami Ginsburg

Two Israeli firms that make wide-format printers have changed hands within the space of the past month: Scitex Vision and Nur Macroprinters (Nasdaq:NURM). But timing is all these two sales have in common.

Scitex was sold to HP for $230 million, earning its former owners a nice profit. Nur's sale to Yuval Cohen's Fortissimo fund, which was announced this week, is an attempt to rescue the company from the sinkhole of debt.

Fortissimo, which specializes in rehabilitating companies in crisis, purchased 56% of Nur for only $12 million, or 35 cents per share. It will henceforth appoint four of Nur's seven directors, with Cohen serving as chairman of the board.

As part of the deal, Nur's creditor banks have agreed to convert $14 million of the $43 million that the company owes them into share options, and another $5 million into promissory notes that will be replaced by shares after three years. In addition, Nur will give the banks $2 million of the money it receives from Fortissimo.

Cutting debt in half

Thus in total, the deal will reduce Nur Macroprinters' bank debt by almost half, to $22 million, and the banks will reschedule half of the remainder over the next 10 years. All of this will help Nur reduce its equity deficit, which stood at $27 million as of June 30, to about $10 million.

Originally, Nur was slated to be sold to a different investment fund, Inspire, for about $10 million. As part of this deal, the banks had agreed to convert $15 million of Nur's debt into shares.

Two months ago, however, Inspire backed out of the deal, forcing Nur to start desperately searching for new investors. Its situation became so grim that it had to issue a "going concern" warning after being unable to meet its financial obligations. The Fortissimo deal enables it to cancel this warning.

"Unlike two and a half years ago, today, the market in which Nur operates is in good shape," noted David Seligman, Nur's chief financial officer. "Today, we know where we stand and where it is possible to go. The fact that customers continued to buy Nur's machines despite its problematic financial situation is the best possible testament to the reputation and quality of these products. The financing Nur will receive from the deal [with Fortissimo] will suffice for all its needs for at least two years ahead."

In the first half of 2005, Nur had revenues of $38.7 million, an operating loss of $1.1 million and a net loss of $2.7 million. For the second quarter, it posted an operating loss of $687,000 on revenues of $20.3 million. Its reduced losses this year compared to previous years were due to layoffs and other cost-cutting measures.

Third owner in fifteen years

The sale to the Fortissimo fund still requires the approval of Nur's shareholders at a general assembly scheduled for next month. Assuming that the deal is approved, Fortissimo will be Nur's third owner since it was founded 15 years ago.

Nur was originally owned by its founder, Moshe Nur. Eight years ago, however, both the company and its owner developed financial problems, forcing Nur to sell his firm to an American investor, Dan Purjes, who will retain 10% of the company even after the Fortissimo sale. Nur's current financial problems began in 2000, when it took out a sizable bank loan to finance its acquisition of the American firm Salsa Digital.

Nur has been downgraded to the Nasdaq Pink Sheet, because its stock no longer meets the listing requirements of the Nasdaq main market. Over the last week, presumably due to rumors of the impending sale, its share price has surged by some 75%, from 36 cents to 63 cents



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