Report: Fabrikant Owes Banks, Suppliers $400 Million

M. Fabrikant & Sons, one of the oldest diamond companies in the world, is $400 million in debt. The company owes $200 million to various banks and $200 million to suppliers, reports, the Israeli economic daily newspaper Globes.

The global diamond centers have feared a collapse of a major diamond firm, and rumors about problems at Fabrikant have been circulating for several months.

In the past few days, concerns were voiced that the diamond giant would file for bankruptcy as it is struggling to get credit lines from the banks. The company has an estimated annual turnover of nearly $1 billion.

According to Avner Salant, a partner in the Israeli Fabrikant-Salant, a 50/50 joint venture between Avner and Yigal Salant and M. Fabrikant, who was quoted in Globes, there will not be a chain reaction in Israel. “The daughter company is stable, with an independent cash flow,” Salant said.

According to Salant, “Fabrikant's situation stems from the blow suffered by the entire diamond industry worldwide. Apart from De Beers as a mining company, the rest of the industry, in manufacturing and marketing, is working on much reduced margins, and is in difficulty.”

Salant told Globes that Fabrikant's global debt amounts to about $100 million, most of it to suppliers. “The company's problem is that after it repaid its debts to the banks last February, as it has done every year, unlike other firms, it received from the banks minimal credit lines, amounting to some 20 percent of what it had before. This was a blow, and this is killing activity.”

M. Fabrikant & Sons was established in 1895, and is one of the world's largest diamond manufacturers. Its jewelry activities include brands Suzy Fabrikant and Fabrikant-Leer International.