After a 9% drop in its share price yesterday, Tadiran Holdings (TLV: TDRN) is trying to minimize the damage from the investigative television program about its air conditioners. Moshe Mamrud, the controlling shareholder in Tadiran, announced yesterday evening that he would take responsibility, and that the company he controls would replace all the air conditioners from the problematic series with new ones.
Before this, the company claimed in a notice to the Tel Aviv Stock Exchange that the cases in which overhead air conditioners caught fire involved air conditioners that were manufactured a decade ago, at a time when the air conditioner business was owned by Carrier, and that production of these machines had ceased.
The investigation broadcast on Channel 10's "Osot Heshbon" program revealed a worrying phenomenon of Tadiran brand air conditioners catching fire. In one case, the fault caused the deaths of two children of the Roimi family aged seven and eleven, in Moshav Keshet on the Golan Heights, when the air conditioner heating their room went up in flames.
The fires occurred in 39 models of air conditioners manufactured over six years, many of them still in use.
The television program claimed that from the moment that each air conditioner caught fire, Tadiran did its utmost to evade responsibility. The evasion was systematic. The first thing the company did was to send a representative to collect the part of the air conditioner that caused the fires. In cases in which Tadiran had to pay compensation, it took care to do so in an out-of-court settlement, without a legal ruling being handed down. The compensation agreements were generally accompanied by a confidentiality agreement.
Tadiran said in its announcement yesterday, "When the faults were discovered, in early 2008, when Tadiran was still owned by Carrier, a notice to the company's customers was published via the media in order to reach the end customers in whose homes the air conditioners from the series in question had been installed. To the best of the company's knowledge, following the recall announcement, most of the air conditioners from these series were properly dealt with.
"The company also wishes to make clear that production of the series concerned, the recall notice, and the cessation of production, took place before Tadiran (the air conditioner business) was acquired from Carrier… In addition, the company wishes to make clear that its reports, including, among other reports, the company's periodic reports and its annual financial statements for 2015, fairly reflect in every material respect the company's business and its financial position, including, among other things, its monetary exposure, if any, on account of claims in connection with the series concerned."
In 2015, Tadiran continued to present growth in its revenue and profits, thanks to its strong branding in Israel and the growing demand for air conditioning products in the local market. For 2015, it posted a net profit of NIS 60 million, almost triple the profit for the previous year. Over the past year, Tadiran's share price has soared 170%, making it a rise of nearly 700% in the past three years, and bringing the company's market cap to NIS 490 million.
Published by Globes [online], Israel business news - www.globes-online.com - on April 4, 2016
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