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Koor Industries Ltd. , which is controlled by Nochi Dankner through IDB Holding Corp. Ltd. unit Discount Investment Corporation notified the TASE today that it has reached a fundamental understanding with the two lenders - Citigroup Inc. and Morgan Stanley - about renewing and improving the financial covenants they are offering Koor to finance its investment in Credit Suisse Group AG shares. The understanding is subject to a binding agreement between the two parties.
Koor wants to reduce the outstanding credit to a maximum of CHF 500 million, as well the interest rate it is paying the two banks for the loan. Koor also wants to reset the maximum debt-to-collateral ratio at 65%, and reduce the target price for Credit Suisse shares at which the banks will have the right to demand immediate repayment, from CHF 14 to 12. Credit Suisse's share is currently trading at CHF 20.46 in Zurich, and at $22.36 in New York, which means that Koor is asking for a target price 41% lower than the current price.
Last week, Koor reported a NIS 3.1 billion loss in January-September, 2011, most of which was due to its holding in Credit Suisse. Following the financial report, Midroog Ltd. has cut its bond rating for Koor from A1 to A2, with a stable outlook, just three months after it was added to the watch list. Midroog says, "Despite the sharp decline in share price (about 50% since the beginning of the year) the risk is still high in view of the high volatility in capital markets."
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