Three days after an Argentinian investor disappointed expectations that he would inject capital into IDB, the heavily indebted group's chairman, Nochi Dankner, proffered a new plan to ward off bondholders and retain his post.
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In the proposed debt arrangement, which he described as "enlarging the pie," Dankner said on Sunday he was ready to commit to putting NIS 800 million into IDB Holding Corporation, the company at the top of his pyramidal holding group.
Under Dankner's plan, the money would move directly into IDB Holding Corporation's wholly owned subsidiary IDB Development Corporation. That in turn controls the non-finance part of the IDB empire, which includes companies such as supermarket chain Super-Sol and mobile operator Cellcom Israel.
Moving the cash into IDB Development would blunt the threat of bondholders' wresting control of the group and pushing Dankner out.
Danker also proposed handing IDB Holding bondholders NIS 175 million in cash from the company and a 54.1% stake in IDB Development. All IDB Holdings bonds would be delisted.
"The financial advantage to IDB Holding bondholders is clear: Firstly, the economic value contained in the proposal is higher than the value of alternative proposals, and secondly, IDB Holding bondholders would be able to share in the potential upgrading of [the value of assets controlled by] IDB Development," IDB said in the proposal.
But the reaction from IDB Development bondholders was far from cheerful. In particular, they noted that the proposal did not explain where the money to refinance the group would come from.
"Dankner keeps telling the public 'the check is in the mail,' even though he knows there's no check and no envelope He keeps trying to buy time at the public's expense," a statement by IDB Development bondholders' representatives said.
Dankner has been struggling for way to pay some NIS 8 billion in debt the IDB group has amassed by divesting holdings such as Clal Insurance and raising outside capital. Bondholders are pressing him to relinquish his controlling stake in the group in exchange for erasing most of the debt.
Late last week, Dankner experienced a major setback when Argentinian businessman Eduardo Elsztain announced he would put no new money into the group. That caused IDB Holding shares to fall 5.9% in Tel Aviv Stock Exchange trading on Sunday; its Series Gimmel bonds due next year declined 3.3%.
The timetable Dankner offered bondholders on Sunday called for NIS 500 million to be transferred immediately if the court overseeing the debt approved the plan. Bondholders would get another NIS 200 million at the end of 2013 and the final NIS 100 million in March 2014. The money would be on top of NIS 41.5 million Dankner transferred to investors holding Series Dalet bonds at the end of 2012.
By way of a guarantee that at least NIS 300 million of the promised amount would be delivered, Dankner said he would put in an escrow account some 10.6 million shares in IDB Development Corporation, amounting to an 18.5% stake in the company.