ESC Medical Battles for Control of Company

In the wake of demands by minority shareholders Ari Genger and Bernard Gottstein, laser manufacturer ESC Medical finds itself in a very real struggle for the reins of the company. Genger and Gottstein have filed paperwork demanding that they be allowed to place members on the board of directors. Last week, the pair announced the mailing of documents purporting to be proxy statements granting Genger and Gottstein the right to replace the entire board of directors with their nominees. In the words of an ESC Medical company statement, "The April 14 filing is yet another indication of this minority shareholder's group's intentions to disrupt the company's business and issue false and misleading information intended to intimidate other shareholders as part of an attempt to take over the company at no cost."

According to the company, the documents purportedly distributed contradict US securities law and are inconsistent with Israeli law and the company's Articles of Association. Such contradictions include the assertion that Israeli law requires a shareholder meeting be held within seven to 21 days of the filing, although no such law exists, and a form of proxy that does not conform with the requirements in the Company's Articles of Association and is therefore invalid if offered at future shareholder meetings. In addition, the proxy solicited would give Genger and Gottstein's attorneys the absolute discretion of appointing additional members to the Board without identifying them to shareholders. The company intends to utilize all measures at its disposal to prevent a change of control that fails to provide maximum shareholder value.

Genger and Gottstein have subsequently filed a demand for an extraordinary general meeting of shareholders to remove all current directors of the company except for two and to elect in their stead six nominees. The board will meet to determine the time and place of the meeting.