IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, has extended a NIS 500 million owners loan to Koor Industries Ltd. (TASE:KOR), because of losses on its 3.21% holding in Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ). IDB units IDB Development Corporation provided NIS 87 million, and Discount Investment Corporation (TASE: DISI) provided NIS 413 million.
Koor said that the loans were bridge loans, which will be repaid when it receives the loan as part of the completion of the sale of subsidiary Makhteshim Agan Industries Ltd. (TASE: MAIN) to China National Chemical Corporation (ChemChina), or March 31, 2012, whichever comes first.
Koor's current paper loss on its Credit Suisse holding amounts to NIS 2 billion, due to the drop in bank's share price to a two-year low on the both Zurich and New York Stock Exchanges. Koor bought the shares for NIS 6.97 billion between March 2008 and March 2010, and their current market value is NIS 4.7 billion.
Koor previously made NIS 3.6 billion in capital gains, including dividends, on its holding in Credit Suisse. Under Koor's loan covenants with the Citigroup Inc. (NYSE: C) and Morgan Stanley (NYSE: MS), which lent it the money to buy the shares, Koor may sells shares to increase its guarantees.
Sources doubt, however, that Koor will sell Credit Suisse shares at a loss in the foreseeable future, preferring to wait for the share price to recover. Koor currently has NIS 1.2 billion in debts, and owes Citigroup and Morgan Stanley NIS 2.8 billion.
Koor's share price fell 11.1% by midday to NIS 45.46, giving a market cap of NIS 2 billion. Discount Investment's share price fell 14.9% to NIS 35.20, giving a market cap of NIS 3 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2011
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