Today was the first trading date for the rights issue of Koor Industries Ltd. (TASE:KOR). On November 23, Koor offered shareholders the right to buy between 23.8 and 24.6 million rights exercisable for shares in order to inject capital into the company. Koor is a subsidiary of IDB Holding Corp. Ltd. (TASE:IDBH), controlled by chairman and CEO Nochi Dankner and the Livnat family.
Koor's main holdings are a 41.5% stake in agrochemicals maker Makhteshim Agan Industries Ltd. (TASE: MAIN), and a 3.4% stake in Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ). Koor's shareholders' equity at the end of September was NIS 3.13 billion. Assuming full exercise of the rights, the issue will raise between NIS 601.03 and NIS 623.17 million at the issue price of NIS 25.30, which is 30.7% less than Koor's opening price of NIS 36.50. The share rose 2.6% today to NIS 40.50.
Koor's share has fallen 82% since the beginning of the year. IDB holds 65.4% of Koor through IDB Development Corp. Ltd. (TASE: IDBD), which owns 13.3%, and its subsidiary, Discount Investment Corporation (TASE: DISI), which owns 52.1%, which means that the float is 34.6%. In other words, the rights held by the public total between 8.22 million and 8.52 million.
6.62 million rights changed hands today, and sources inform ''Globes'' that IDB bought the rights sold. Clause 2.3.2.12 of the rights prospect states that Discount Investment and IDB Development have "notified the company that they intend to exploit their full rights offered them in the proposed report."
A source told "Globes", "Nochi Dankner is exploiting the trading day in the rights to increase his holding in Koor by 10-15%. He is increasing his stake in view of the discount in Koor and the accounting capital gain that will accrue to Discount Investment and IDB Development."
The source added, "I believe that the controlling shareholders are behind the massive purchases of the rights, because in the current market climate, I can't see any other major player deciding to invest heavily in the company. Only a controlling shareholder has the possibility of reporting a large accounting capital gain on the purchase of shares through the exercise of the rights at the current market value. In addition, there was a similar pattern in the recent offer to buy in [Discount Investment subsidiary] Property and Building Ltd. (TASE: PTBL)."
If Discount Investment and IDB Development exercise all their rights, they will increase their stake in Koor by 13.9% to 79.3%. If they increase their stakes in the company by 10% to 20%, their capital gain could reach NIS 400-500 million.
Koor declined to comment.
Published by Globes [online], Israel business news - www.globes-online.com - on December 18, 2008
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