Better credit terms for Koor
Photo: AFP
Floor price down to fund Credit Suisse buy
At Koor's request, Morgan Stanley and City drop floor price for Credit Suisse share from 18 francs to 14 francs
Morgan Stanley and City have dropped the floor price on the loan they granted Koor for the acquisition of Credit Suisse
from 18 Swiss francs to 14 francs, Koor advised the Tel Aviv Stock Exchange on Sunday. In effect, this means better credit terms for Koor for the financing deal.
Following Koor's request, it signed new agreements with the two lending banks on the credit terms mainly for a considerable reduction of the price threshold in which the lending bodies may demand immediate repayment of the loan from 18 francs to 14 francs per share.
Koor's debt to the two banks totals NIS 2.9 billion ($800 million). Its net credit after the deduction of its deposits in the banks is NIS 1.4 billion ($390 million).
The arrangements between the parties stipulate that the moment Credit Suisse shares drops below 18 francs the debt-to-security ratio as per the credit arrangement will drop to 65% from 68%.
Additionally, the agreement stipulates that when the share price is below 18 francs per share, the debt-to-security ratio cannot exceed 77.5% instead of 80% in the previous arrangement. In the event that the debt-to-security ratio does exceed this threshold, Koor might be obligated to put up additional securities in the form of cash guaranties. Regardless, the loan's interest rate was left unchanged.
The plummet in Credit Suisse's share price in the wake of the escalating euro zone debt crisis lead Koor to a gargantuan NIS 1.9 billion ($520 million) loss in its second quarter.
Click here to read this report in Hebrew
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