(NYSE:KOR) are reportedly investigating the possibility of liquidating the conglomerate by spinning off its major holdings among its shareholders, TheMarker.com has learned from officials affiliated with the concern.
But Koor's official representative has denied the report saying: "Koor shareholders have no intention of spinning off the concern's assets."
The decision to consider a demerger reportedly stems from the 60% fall in the conglomerate's share price during the past 12 months, 30% of which occurred in the last month alone. Shareholders in the conglomerate, including the Kolber and Bronfman families and
, have in recent weeks been holding accelerated discussions on how to boost stock's value.
The idea to spin off the conglomerate's assets first came up four years ago when the conglomerate was controlled by
, which is owned by the Disney family.
Stanley P. Gold, the President and Chief Executive of Shamrock Capital Advisors, had been disappointed by Koor's performance and sought to up its share value by splitting up the conglomerate to what were then his main holdings,
But the idea was turned down by the conglomerate's CEO Benny Gaon, who opted instead to retain the concern as an operational holdings company. He was backed up by the CEO of Bank Hapoalim, Amiram Sivan. Back then Bank Hapoalim held 23% of the conglomerate.
Following this, a conflict erupted between Gold and Gaon. Jonathan Kolber and Charles Bronfman took advantage of Gold's dissatisfaction, and offered to acquire Gold's controlling stake in Koor. In July of 1997, the two bought Koor from Shamrock at $24 a share.
The fall in Koor's share value during the past year is what's led shareholders to seek a way to raise the share's value using financial tactics. The concern's management had high hopes of spinning off ECI into five separate divisions, which would be either issued or sold. But the subsequent crisis in the telecommunication market sent ECI's shares crashing.
Over the last few weeks the pressure on Vice Chairman and CEO Jonathan Kolber to boost the share's value has increased. Most of it has come from shareholders, investors and analysts all of whom expressed doubts regarding Koor's strategy.
But the bulk of the pressure came from Charles Bronfman and Bank Hapoalim, the conglomerate's largest shareholders.
Sources affiliated with Koor estimated last week that Kolber is trying to buy time before considering liquidation, in the hope that ECI will sell off one of its divisions in the next few weeks at a high value. This, Kolber probably hopes, could revive ECI's and Koor's shares. It is believed Koor is negotiating to sell the optics division of ECI, Lightscape, at a valuation higher than ECI's total current market worth.
Koor's shares were trading at $7.5 on Thursday, which is 70% lower than their price four years ago.