It has been a busy few days at Nochi Dankner's IDB group. At the end of the week, the board of directors of the group's Discount Investment Corp., which has a controlling interest in the Maariv newspaper, decided to inject another NIS 8 million into the media outlet, which will help meet September's payroll. The move will also buy time to find a solution for the ailing paper. In another development, IDB Holding Corp. submitted documentation regarding an agreement with its bondholders that will enable it to pay NIS 35 million to holders of its Series Bet bonds without it being considered an improper preference among creditors.
Last month, the Tel Aviv District Court granted the Maariv group a stay of proceedings against creditors and ordered the court trustees to solicit offers to buy the paper. Earlier last month, Maariv's owners struck an agreement in principle to sell the newspaper to Shlomo Ben-Zvi, who also publishes the right-leaning daily Makor Rishon, but Judge Varda Alshech has ordered the sale of the paper to be opened to other potential buyers.
Discount Investment said it was providing the NIS 8 million to help the court maintain Maariv in business and to provide continuing employment to the maximum number of employees. If the sale to Ben-Zvi proceeds, he said he intends to lay off all of the paper's staff and rehire about 300 of them, essentially editorial and administrative staff, under his own terms. The newspaper employs about 2,000 employees including those at its Bat-Yam printing plant. The plant is not part of the deal but printing and distribution staff there would also be expected to be laid off if the facility is sold separately.
The injection of NIS 8 million is being made as a short-term loan of up to 180 days, subject to the court's approval, and the it will take precedence over other outstanding obligations to creditors. The purchase of a controlling stake in Maariv less than two years ago has required Discount Investment to invest NIS 385 million, which will now rise to NIS 393 million, assuming that the loan goes through.
In addition to the Discount Investment loan, the court on Thursday approved a NIS 16 million loan from Israel Discount Bank which, when coupled with the NIS 8 million, will apparently enable the trustees to pay September salaries at the newspaper. Dankner has committed to pay his company's proportional share of the wages, based on his company's ownership interest. Ofer Nimrodi's Israel Land Development Co. has its own 27% stake in the paper but has not yet committed to any further infusion of funds. ILDC has said, however, that it has scheduled a meeting this week with the Maariv workers' committee to gauge whether there is in fact a problem paying compensation, including severance pay for laid-off workers, and to look at appropriate solutions.
With regard to the new arrangement to pay IDB Holding's Series Bet bondholders, the agreement follows an announcement by IDB Holding that it intends to issue a rights offering to its shareholders to raise the necessary NIS 35 million. In February, Dankner managed to complete a NIS 321 million share offering for IDB Holding which attracted funds from a number of major financial players, but it is thought unlikely that an offering of that magnitude would be successful at the moment.
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