Secretive Arrow missile maker Tomer plans $100 million debt raise
The state-owned company is preparing to tap institutional investors as it expands production and targets $600 million in sales by 2030.
Tomer, the state-owned company that manufactures, among other things, the motors used in Arrow air-defense missiles, is preparing for its first debt raise from institutional investors to finance an expansion of its production capacity. Calcalist has learned that the company plans to raise at least NIS 300 million ($100 million), with the Government Companies Authority setting the maximum issuance at NIS 500 million ($166M).
The fundraising is planned for later this year through bonds traded on the TACT Institutional platform, using a model similar to the one adopted by Rafael. The structure would allow Tomer to raise capital without becoming a publicly traded company and without being subject to the disclosure requirements imposed on public companies, an important consideration given that much of its activity is classified.
Tomer's plan to raise capital through bonds began taking shape earlier this year through a joint effort between the company's management and the Government Companies Authority. Roi Kahlon, head of the Authority, disclosed the plan about two months ago at a conference at the Tel Aviv Stock Exchange, saying that the company's financial data indicated it was mature enough to become a public company.
However, senior officials at the Ministry of Finance and the Ministry of Defense have been less enthusiastic about such a move, citing the circumstances under which Tomer was originally established.
Tomer was founded about a decade ago as part of the privatization of IMI Systems and its sale to Elbit Systems. Its rocket propulsion operations and missile engine manufacturing, which were considered a unique national center of expertise, were excluded from the transaction and remained under state ownership.
The Government Companies Authority sees a bond offering to institutional investors, without turning Tomer into a publicly traded company, as a compromise between the state's interest in protecting the company's classified operations and its need for capital to support its expansion.
Tomer serves as a key subcontractor to Israel Aerospace Industries (IAI) and Elbit Systems, manufacturing engines for the Arrow 3 and Arrow 4 missiles, Shavit launch vehicles used to put Ofek satellites into orbit, the Barak MX system, the Rampage air-to-ground missile and artillery rockets fired from the PULS system.
Growing demand for missile systems, driven by the arms race in Israel and globally, has prompted Tomer to expand its production lines and increase its workforce to approximately 1,000 employees.
The company's growth is also being supported by IDF procurement of Arrow missiles and their sale to Germany in two deals totaling approximately 7 billion shekels ($2.3 billion). Tomer's sales have reached approximately NIS 850 million ($280M) since the beginning of the year, about NIS 150 million ($50M) above its target.
By 2030, the company plans to increase annual sales to approximately NIS 1.8 billion ($600M) and its workforce to 1,400 employees.
Maayan Harel, deputy director of the Government Companies Authority, has set a target for Tomer Chairman Roni Moreno, CEO Dotan Gabay and other senior executives to raise at least NIS 300 million ($100 million) by the end of the year. Meeting the target would allow the executives to receive an increase of up to 20% in their bonuses.
