Flextronics to get credit insurance for ECI deal
Jan 08, 2013 (Globes - McClatchy-Tribune Information Services via COMTEX) --
Flextronics International Ltd. (Nasdaq: FLEX), which produces electronic components at its Ofakim plant in southern Israel, is set to receive credit insurance to insure its $85 million contract with communications equipment maker ECI Telecom Ltd. The Ofakim plant has 600 employees.
In the past few weeks, Flextronics Israel has warned that it would stop production at Ofakim and fire the plant's employees, after the company could not obtain $50 million guarantees or credit insurance for the ECI contract. In view of these problems, the company asked government-owned Ashra Israel Export Insurance Corp. Ltd. to insure the contract, but the Ministry of Finance rejected the request because it of its high risk.
Efforts by Flextronics Israel's management to save the ECI deal have continued for weeks, and it harnessed top officials at the Ministry of Finance, Ministry of Industry, Trade and Labor, and at other ministries to find a solution to prevent the crisis from escalating. Sources informed "Globes" today that, a few days ago, a top government official arranged agreements in principle, which were a breakthrough toward a solution.
"A creative solution is being prepared, in which many parties are participating, including the Ministry of Finance, the Ministry of Labor, ASHRA, and both ECI and Flextronics. The pending agreement could be signed soon, and will allow Flextronics to obtain the guarantees it needs, and prevent a severe jobs crisis in Ofakim," a party in the effort to solve the crisis told "Globes". He added that the solution would minimize the government's exposure in the extreme case that the insurance policy is activated.
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