Nochi Dankner-controlled IDB Holding Corp. Ltd. (TASE:IDBH) unit Koor Industries Ltd. (TASE:KOR) announced after the markets closed yesterday that it expects to recognize a loss on its investment in Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) in its financial report for the second quarter of 2011. The announcement was made in response to a query by the Israel Securities Authority. Koor's loss on the investment stood at NIS 1.8 billion at the end of June. Koor owns 3.21% of Credit Suisse.
Koor's loss on its Credit Suisse investment currently stands at NIS 2.5 billion, which it not yet reported in its profit and loss statement, because most of the loss occurred before this week's plunge in the share price in the aftermath of Friday's downgrade of the US credit rating by S&P.
Koor said that the subsequent loss in value of Credit Suisse's share price after the second quarter would be included in the profit and loss statement. However, any increase in value would be reported in the capital fund. Koor added that even if sells some of its Credit Suisse shares after the second quarter, it will recognize the full loss on the sales at the lower Credit Suisse share price on the date of the sale compared with the share price on the date that Koor bought the shares.
In a separate statement yesterday, Koor said that it had reached agreements with Citigroup Inc. (NYSE: C) and Morgan Stanley (NYSE: MS), which lent it the money to buy the Credit Suisse shares, to lower the price at which the two banks had the right to demand immediate repayment of the loans to CHF 18 per share from CHF 22.
Koor invested NIS 6.97 billion to buy its Credit Suisse stake, which is currently worth NIS 4.5 billion, reflecting a loss of NIS 2.5 billion. Koor share price has fallen over 50% so far this year, in part because of this loss.
Credit Suisse's share price fell 9.1% in New York yesterday to $28.72 and fell 5% to CHF 22.63 in Zurich.
Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2011
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