Koor Gets Relief from Creditors, Who Will Forgive Chunk of Debt

The financially stricken Koor Industries got some relief from local and foreign creditors, in a deal brokered Friday by Finance Minister Shimon Peres.

The creditors agreed to write off nearly $257 million of Koor’s billion dollar debt.

Peres is trying to avert total collapse of the conglomerate, which accounts for about a quarter of Israel’s industrial output and employs about 20,000 persons.

The deal was hammered out at a meeting late last Thursday with Koor officials and representatives of its credit lenders. The meeting followed a week of apparently fruitless negotiations to restructure the debt.

Peres emerged at midnight to tell reporters, “I think we have an agreement.” The foreign bankers left for home about an hour later.

Israeli banks will bear the brunt of the loss incurred by the loan write-offs. They will cancel $180 million of the $800 million they are owed. Overseas banks agreed to write off $77 million of a $205 million debt.

They will be reimbursed in the amount of $87 million by the Israeli banks as soon as the agreement is signed. Another $41 million in debt will be rescheduled for payment over the next five years.

The arrangement, however, did not stave off a crisis at one of Koor’s subsidiaries, the veteran Shemen oil and soap factory in Haifa.

200 WORKERS LOSE JOBS

Shemen, founded in 1919, closed down over the weekend, following a work dispute. The closing was yet another symptom of the grave malady afflicting the giant Koor conglomerate.

The management of the pioneering Shemen factory sent letters of dismissal to 200 workers and ordered the plant closed, following extreme sanctions taken by the workers last week.

In their actions, preventing products from leaving the plant, workers barred management from even entering the workplace and also jeopardized the work of the firm’s computer.

Shemen and another factory, Etz Hazayit, in Petach Tikva, are Israel’s two major oil and soap plants, and both are owned by Koor, which is in turn owned by the Histadrut, the Israeli trade union federation.

Thus, Histadrut once again found itself caught up in the dilemma caused by its dual responsibility, both as employer and as representative of the work force.

Representative of the complicated matter was the positioning of the Haifa workers’ council, which is for all intents and purposes a branch of the Histadrut, in support of the workers against the employers.

Background for the Shemen workers’ dispute lies in the fact that Shemen and Etz Hazayit agreed in the past to follow a manufacturing and sales policy that would avoid duplication. But Shemen workers felt that all profitable operations were transferred from their plant to Etz Hazayit.

Fearing their plant would eventually be closed down, the workers demanded their plant operate independently of Etz Hazayit and initiated sanctions against their own management to try to effect that end. In the process, they created a self-fulfilling prophecy.