The Koor Industries crisis took a turn for the worse over the weekend.
The giant Histadrut-owned conglomerate, some $1.46 billion in debt, might go under unless the government comes up with a bailout plan, something the Finance Ministry seems loath to do.
The gravity of its situation emerged after a delegation of Koor’s top management apparently failed to persuade Bankers Trust Co. of New York to halt bankruptcy proceedings.
Koor’s managing director, Benny Gaon, flew to New York last week for discussions with the chief officers of Bankers Trust, Koor’s single largest overseas creditor.
The New York bank had only a few days earlier petitioned a Tel Aviv district court to place Koor in liquidation to satisfy an unpaid debt.
The default was on $20 million due at the beginning of this month. It is only a small fraction of Koor’s outstanding debt to Bankers Trust, which is said to be somewhere between $105 million and $150 million.
The Americans seem to have little faith in Koor’s ability to meet its obligations. The talks in New York, which took place Wednesday and Thursday, reportedly were fruitless.
According to sources here, there was “bad chemistry” at the sessions. Gaon seems to have been unable to establish credibility with the American bankers.
They did not care for his light-hearted approach and thought him overly optimistic, the sources said.
An American banking source said everything Gaon had to say was taken with “a grain of salt.”
According to Israeli sources, the problem was that Gaon is accustomed to the less formal approach of labor-trained industrialists and other kindred spirits in the Israeli business community with whom he deals.
ISRAELI CREDITORS MEET
The American bankers were described as tough and “hard-headed.” The nature of the proposals made to them were not disclosed.
The Koor manager was accompanied on his mission by Eitan Berglas, chairman, and Amiram Sivan, managing director, of the Histadrut-owned Bank Hapoalim, Koor’s principal creditor. Also attending was Koor’s legal counsel, Ram Caspi.
In addition to the money owed Bankers Trust, Koor is $105 million in debt to Drexel Burnham Lambert, the Wall Street traders and investment bankers, and is said to owe another $80 million to the Irving Trust Co. of New York and the Societe Generale of France.
An additional $65 million is owed to several European banks and their American affiliates.
In Israel, Koor has a $600 million obligation to Bank Hapoalim and owes another $105 million to Bank Leumi. Smaller sums are due other Israeli banks.
The Koor crisis poses a dilemma for the government, barely two weeks before Election Day.
The conglomerate employs nearly 30,000 workers and accounts for more than 10 percent of Israel’s gross national product and its exports.
Premier Yitzhak Shamir, the Likud leader, has little sympathy for the Labor-dominated enterprise. He has warned, nevertheless, that Koor cannot be allowed to fail.
But the Finance Ministry, headed by Moshe Nissim of Likud’s Liberal Party wing, fears that a government guarantee of Koor’s debts would trigger a flood of demands from other ailing enterprises, in the private as well as public sectors.
After all-night discussions between Israeli banks and Treasury officials, Koor’s Israeli creditors seemed on the verge of joining Bankers Trust’s move to liquidate the conglomerate to protect their own interests.
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