Further to reports by Koor Industries Ltd (“the Company”) on March 24, 2008, March 25 2008, April 21, 2008 and May 6, 2008, concerning the possibility that the company might acquire shares of European financial institutions (“the Shares”), the company announces that a foreign limited partnership that it wholly owns and controls (“the Partnership”) contracted on May 16, 2008 with the Goldman Sachs Group (“Goldman Sachs”) for a non-recourse credit facility (“Non-recourse credit facility”), which at Goldman Sachs’s request has been organized as a financial derivatives transaction. The non-recourse credit facility complements the recourse credit facility entered into on March 24, 2008 between the company and Goldman Sachs (“recourse credit facility”). The purpose of both credit facilities is the (partial) financing of the purchase of shares. The terms of each facility are different.  Goldman Sachs may involve certain other parties in a non-recourse credit syndicate.

The overall facility of the two lines of credit is USD 1.5 billion, divided 5/11 of recourse credit facility and 6/11 of non-recourse facility. The provisions of the said division only come into force at the time an overall amount of more than USD 250 million is drawn down from the recourse credit facility. It should be noted that drawing down more credit than the said sum is subject to fulfillment of specific, suspensive conditions.  

In the event that the entire facility is used, the investment in shares, including the funds that the company and the partnership shall be obliged to provide, should reach about USD 2.7 billion.

It should be noted that at the time of this report, the shares of financial institutions whose purchase the company’s Board of Directors has approved are those of Bank Credit Suisse and Barclays Bank, for an overall investment of NIS 1.5 billion. It is possible that the purchase of shares in other European financial institutions will be approved in the future. At the time of this report, only shares in Barclays Bank have been purchased in quantities that are not material. It is also noted that use of the credit facility and the Company’s investments in shares are dependent on several conditions, including the Company’s assessment of market developments. The Company wishes to clarify that there is no certainty as to the carrying out of investments or their scope.