SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the Month of April 2019
Commission File Number 000-28998
ELBIT SYSTEMS LTD.
(Translation of Registrant’s Name into English)
Advanced Technology Center, P.O.B. 539, Haifa 3100401, Israel
(Address of Principal Corporate Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
x Form 20-F o Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: o
o Yes x No
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-______________
Attached hereto and incorporated herein by reference as Exhibits 1,2 and 3, respectively, are the Registrant's Press Release dated April 30, 2019, the Unofficial English Translation of Elbit Systems Ltd. Monitoring Report – April 2019 and the Consent of the Rating Agency dated April 30, 2019.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ELBIT SYSTEMS LTD.
/s/ Ronit Zmiri
Date: April 30, 2019
MIDROOG Ltd. Comments that the Acquisition of Harris Night Vision Business Is Expected to Moderately Slow Elbit Systems' Coverage Ratios, Due to Debt Reducing Steps Taken by Elbit Systems
Haifa, Israel, April 30, 2019 - Elbit Systems Ltd. (NASDAQ: ELST, TASE: ELST) ("Elbit Systems" or “the Company”) announced today that the Israeli rating agency, Midroog Ltd. ("Midroog"), issued a special report issuer comment (the "Issuer Comment"), that the anticipated completion of the transaction underlying the signing of an agreement by the Company’s U.S. subsidiary, Elbit Systems of America, to acquire Harris Corporation’s Night Vision Business, as announced by the Company on April 5, 2019, (the "Acquisition"), is expected to moderately slow the Company's coverage ratios, due to debt reducing steps taken by the Company including a recent share offering, as announced by the Company on April 9, 2019.
The Series "A" Notes issued by the Company in 2010 and in 2012 (the "Notes"), are currently rated "Aa1" (on a local scale), with negative outlook.
Midroog will continue to examine during a period following the closing of the Acquisition, the impact of the Acquisition on the Company’s cash flow and financial results,
as well as the Company’s overall financial leverage, as a result of the Acquisition as well as the acquisition of IMI Systems, with a reasonable possibility that the Company will recover its coverage ratios in the medium term.
Midroog's official Issuer Comment in Hebrew, will be submitted to the Israel Securities Authority and the TASE. An unofficial English translation of Midroog's Issuer Comment will be submitted by the Company on Form 6-K to the U.S. Securities and Exchange Commission.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy any Notes.
About Elbit Systems
Elbit Systems Ltd. is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios, cyber-based systems and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems.
For additional information, visit: www.elbitsystems.com, follow us on Twitter or visit our official Youtube Channel.
Joseph Gaspar, Executive VP & CFO
David Vaaknin, VP, Head of Corporate Communications
Elbit Systems Ltd.
GK Investor Relations
This press release contains forward‑looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current fact. Forward-looking statements are based on management’s expectations, estimates, projections and assumptions. Forward‑looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results, performance and trends may differ materially from these forward‑looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.’s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward‑looking statements speak only as of the date of this release. The Company does not undertake to update its forward-looking statements.
Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this Press Release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies. All other brand, product, service and process names appearing are the trademarks of their respective holders. Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein.
Elbit Systems Ltd.
Issuer Comment | April 2019
Unofficial English Translation
This report is a translation of a report that was written in Hebrew for a debt issued in Israel. The binding version is the one in the original language.
Analyst, Primary Rating Assessor
Sigal Issachar, VP
Head of Corporate Finance
Elbit Systems Ltd.
Elbit’s acquisition of Harris Corporation’s night vision business is expected to moderately slow Elbit’s coverage ratios, due to debt reducing steps taken by Elbit
Elbit Systems Ltd. ( “the Company”) (Midroog rating Aa1.il with a negative outlook), announced on April 5, 2019 the signing of a definitive agreement with Harris Corporation (“Harris”), a U.S. defense company, under which the Company’s U.S. subsidiary Elbit Systems of America, LLC will acquire Harris’ night vision business (“HNV”) for US$350 million in cash. HNV’s center of activities is the night vision systems manufacturing facility in Virginia, USA, which is considered one of the world leaders in its field and having strategic importance to the US armed forces. The background
to the sale of HNV by Harris is anti-trust considerations since Harris intends to merge with L3 Technologies, a U.S. defense company, which is also a significant actor in the field of night vision systems.
Midroog regards the Company’s successful track record with major M&A’s in the past as a positive in this context, and estimates that possession of a strategic plant in North America would contribute to the Company’s positioning vis-a-vis the U.S. defense market, which is the largest defense market globally and a strategic one for the Company, and would also further the Company’s product's ability to penetrate the U.S. defense market. Furthermore, the acquisition may potentially allow for the development of new night vision products based upon the combined technologies of HNV and Elbit. However, Midroog does not assume significant synergies between HNV and Elbit in the short term, and we regard the deal’s purchase multiple as relatively high, even though the transaction embeds long-term strategic advantages which may be provided to the Company.
Midroog estimates that the deal’s net effect is expected to moderately slow the Company’s coverage ratios, due to debt reducing steps taken by the Company including recent sale of Company shares for gross proceeds of approximately USD 186 million.
During January 2019, Midroog set the rating outlook for the Company to negative due to expected erosion in the Company's debt coverage ratios due to a significant increase in the Company’s debt following the acquisition of Israel Military Industries ("IMI"). According to Midroog’s base case, following the IMI acquisition, the Company’s consolidated debt coverage ratios were expected to slow to approximately 3.0X adjusted financial debt to EBITDA and 3.6X adjusted financial debt to FFO, compared to 1.8X and 2.3X as of September 30, 2018, prior to the IMI acquisition. We believe that the HNV acquisition will not cause a significant deviation from the ranges of coverage ratios which have been taken into account within Midroog’s base case, even though we did not estimate that a deal of this scale would take place, due to the recent sale of shares and other leverage reducing steps. Midroog will continue to examine the implications of the HNV and IMI acquisitions for the Company’s cash flow and financial results, as well as the Company’s overall leverage in the following period. We estimate that is likely that in the medium term the Company will be able to restore its coverage ratios levels.
Elbit Systemd ltd. - Issuer Comment
Elbit Systems Ltd. is an international high technology Company based in Israel, engaged directly and through subsidiaries in development, manufacturing, integration and marketing of systems and products for defense, homeland security and commercial applications for use in air, sea and land. The Company is 44.3% controlled (indirectly) by Mr. Michael Federmann and the remainder is owned by institutional investors and by the public. The Company CEO is Mr. Bezhalel Machlis.
Elbit Systems Ltd.
Rating of Defense Industry Companies -Methodology Report - February 2014
Midroog's rating scales and definitions
Table of Affinities and holdings
These reports are available on the Midroog website at: www.midroog.co.il
Date of issuer comment: April 30, 2019
Elbit Systemd ltd. - Issuer Comment
Information from the issuer
Midroog relies in its ratings inter alia on information received from competent personnel at the issuer.
Long-Term Rating Scale
Issuers or issues rated Aaa.il are those that, in Midroog judgment, have highest creditworthiness relative to other local issuers.
Issuers or issues rated Aa.il are those that, in Midroog judgment, have very strong creditworthiness relative to other local issuers.
Issuers or issues rated A.il are those that, in Midroog judgment, have relatively high creditworthiness relative to other local issuers.
Issuers or issues rated Baa.il are those that, in Midroog judgment, have relatively moderate credit risk relative to other local issuers, and could involve certain speculative characteristics.
Issuers or issues rated Ba.il are those that, in Midroog judgment, have relatively weak creditworthiness relative to other local issuers, and involve speculative characteristics.
Issuers or issues rated B.il are those that, in Midroog judgment, have relatively very weak creditworthiness relative to other local issuers, and involve significant speculative characteristics.
Issuers or issues rated Caa.il are those that, in Midroog judgment, have extremely weak creditworthiness relative to other local issuers, and involve very significant speculative characteristics.
Issuers or issues rated Ca.il are those that, in Midroog judgment, have extremely weak creditworthiness and very near default, with some prospect of recovery of principal and interest.
Issuers or issues rated C are those that, in Midroog judgment, have the weakest creditworthiness and are usually in a situation of default, with little prospect of recovery of principal and interest.
Note: Midroog appends numeric modifiers 1, 2, and 3 to each rating category from Aa.il to Caa.il. The modifier '1' indicates that the obligation ranks in the higher end of its rating category, which is denoted by letters. The modifier '2' indicates that it ranks in the middle of its rating category and the modifier '3' indicates that the obligation ranks in the lower end of that category, denoted by letters.
Elbit Systemd ltd. - Issuer Comment
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Elbit Systemd ltd. - Issuer Comment
CONSENT OF RATING AGENCY
We consent to the incorporation by reference in the Registration Statements, on Form S-8 (No. 333-223785) and on Form F-3 (No. 333-230761), of Elbit Systems Ltd. (the “Company”) of the unofficial translation of our Issuer Comment dated April 30, 2019, with respect to the Series A Notes issued by the Company, included in this current report on Form 6-K.
Sigal Issachar- VP, Head of Corporate
April 30, 2019.