Eduardo Elsztain, the Argentinian real estate mogul Nochi Dankner is counting on to prop up his faltering IDB group, gave a surprise news conference yesterday, praising the company’s holdings and promising to inject capital − so long as the courts don’t hand over the group to its creditors.
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“We stand by our intention of investing $75 million directly into IDB Holdings as we promised. IDB is a very strong company financially. We have studied the business and we like it. We think that the Israeli economy is strong, and we want to put money into it immediately,” Elsztain said, with Dankner standing at his side. “Of course, this isn’t entirely up to us but on the decision of the court.”
Elsztain said the capital would not be entirely his own but would come from additional investors. “We are talking about big names and not Israeli, who I will identify later.”
Elsztain’s arrival in Israel comes at a critical juncture for IDB. Investors holding bonds in two of the companies sitting at the top of the IDB pyramid − IDB Development Corporation and IDB Holding Corporation − have agreed on terms for a debt-for-equity swap. That would put them in control of the company, and through it, some of Israel’s best-known businesses such as Cellcom Israel and Super-Sol.
Over the weekend Danker came back with a counterproposal, which relies on an injection of cash from the Argentinian businessman. Tomorrow, Tel Aviv District Court Judge Eitan Orenstin is expected to weigh the two proposals.
“We want to invest a lot of money in Israel. It’s clear [however] that this depends on the court and creditors,” Elsztain said. “We know that this is the key week and we want to broadcast our desire to move forward.”
It was the first-ever appearance by Elsztain before members of the Israeli media, which received very short notice of the event. The news conference itself, held at IDB headquarters on the 41st floor of the Azrieli Tower in Tel Aviv, lasted just 15 minutes. Elsztain had landed in Israel only hours earlier.
“I’ve come from New York. There, I spent the week in meeting with Nochi,” he said. “But I decided the best way to advance matters is to come to Israel. During a game of the Boca Juniors soccer team, I got a phone call from Nochi and I came.”
The Elsztain press conference overshadowed one called earlier yesterday by a group of 10 Israeli mayors to voice their support for Dankner. They called off a planned march on behalf of Dankner but still expressed support for a man who had contributed financially to communities in Israel’s Negev and Galilee in the past.
“We have also experienced being turned into enemies of the people,” Sdredot Mayor David Buskila said. “Some people think it’s a shame, but it’s no shame to tell the truth. There’s no shame to be grateful and say thank you to those who worked for our residents.”
Nevertheless, even after the press conference it was not clear why Elsztain didn’t agree to put the promised investment capital in an escrow account as the representatives of IDB Holding’s bondholders have demanded as a sign of goodwill. It was similar unclear whether the other investors Elsztain named had given firm commitments.
Asked why he is so optimistic about the IDB group and whether he knows something that outsiders do not, the Argentinian businessman answered: “We have learned that there are good assets and through a change in finance we will be able to profit in part because of the [strength of] the Israeli economy. It’s business for us. We believe in Makhteshim Agan a lot,” he said, referring to the agrochemical company in which IDB holds a minority stake.
“We believe Nochi has done a lot of good things and Nochi is a excellent person who is in a pressured situation. I believe that if we work together we’ll do good things.”
Elsztain declined to comment on Bank Leumi’s decision last month to rescind an offer to write off part of the debt owed by by Danker’s private investment vehicle, Ganden Holdings. Until now, Elsztain has invested in Ganden, which controls IDB Holding, and not in IDB Holding itself or in IDB Development.
Meanwhile, representatives of IDB Holding bondholders, who on Sunday approved by a margin of 70% to 30% the debt-for-equity plan, discounted the significance of the Danker counterproposal, saying it was not very different than the one he proposed in March with Elsztain.
“The terms of the Dankner and Elsztain proposal are vague, obscure and far from being a bridging offering − as far as Tel Aviv is from New York,” said Yoav Armoni, a bondholder representative and CEO of Gilad Pension Fund. “The proposal is a sham.”