Workers go to court to stop Polgat from paying dividend to new owner
Several hundred workers from Polgat Textile and Bagir yesterday asked the Tel Aviv District Court to refuse to approve a dividend distribution by their mutual parent company, Polgat, until the company proves that this will not impair its ability to pay them severance pay should they ever be dismissed.
Polgat's plan to distribute a NIS 125 million dividend needs the court's approval because the company does not meet the profitability criteria for distributing a dividend on its own authority. The request was filed by 140 employees of Bagir, a Polgat subsidiary, and 470 employees of Polgat Textile, a subsidiary of Guney Polgat, which is a joint venture between Bagir and the Turkish firm Guney Sanayi.
The workers, represented by attorney Galila Hornstein, also asked the court for an injunction against the planned sale of Bagir's stake in Guney Polgat to a foreign company, Emson Enterprises. The workers' request follows hard on the heels of a similar request filed earlier this week by Guney Sanayi (See box).
"The sale to a foreign company, with no prior notice to or consultation with the workers' committee, violates the rules laid down in the labor court's ruling," Hornstein argued on the workers' behalf. "The workers' committee wishes to negotiate with the company's management in order to dissuade it from the sale, which could cause Polgat to close."
In their request that the court disallow the dividend distribution, the workers noted that Polgat recently filed a request to reduce its equity by up to $34 million. "This process is liable to leave the company with equity approaching zero," Hornstein wrote.
"Currently, Polgat Textile is NIS 6.16 million short, and Bagir is NIS 1.5 million short, of the sums that are supposed to be setting aside to finance severance pay for Polgat workers," should such payments ever be needed, Hornstein continued. "The company owes its workers $1.4 million in payments to their severance pay fund, and its shareowners are suffering from heavy losses. The manner in which this process [the dividend distribution] is being carried out raises serious suspicions that what management has in mind is not the good of the company."
The court is expected to hold a hearing next week on Polgat's request to distribute the dividend.