While negotiating a debt restructuring for his IDB Holding, controlling shareholder Nochi Dankner has been quietly talking with Bank Leumi about a similar deal for Ganden Holdings, IDB Holding's parent.
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Leumi has drawn up a deal for Ganden but has yet to sign; it's waiting to see how well Dankner does finding foreign investors for Ganden and assuaging other creditors.
Leumi is Ganden's largest creditor, owed between NIS 450 million and NIS 500 million. Ganden also owes Bank Mizrahi-Tefahot between NIS 80 million and NIS 85 million. Meanwhile, Leumi's exposure to IDB Holding's bonds is around NIS 120 million, on which the bank is expected to take a 50% haircut.
In the talks between Dankner and Leumi, which are being conducted by the bank's CEO Rakefet Russak-Aminoach, Leumi would write off part of Ganden's debt, and the repayment of the rest would be postponed. There would also be a cash payment by Dankner and, it appears, additional collateral and an increase in the interest rate paid by Ganden.
Analysts estimate that Leumi will have to write off between NIS 100 million and NIS 200 million of Ganden's debt.
Sources have also told TheMarker that Dankner is in talks with another foreign investor besides Argentine Eduardo Elsztain to seek a $50 million investment in Ganden.
Last year Leumi reduced its total credit exposure to Dankner's IDB Group by more than NIS 2 billion to less than 10% of the bank's total capital (based on the bank's Tier 1 and Tier 2 capital holdings).
Mizrahi-Tefahot wrote off all its Ganden debt following the Bank of Israel's instructions to classify the debt of Dankner's privately owned companies – Tomahawk Investments and Ganden – as bad debt. But Mizrahi-Tefahot has yet to seal a debt-restructuring deal with Ganden.
At present Leumi prefers not to break apart Ganden to get at the collateral; it fears such a move would destabilize the entire IDB Group. Leumi holds a 30.7% stake in IDB Holding as collateral from Ganden, currently valued at NIS 157 million. Leumi also has personal debt guarantees from Dankner for part of Ganden's debt, but the collateral doesn't cover the value of Ganden's debt.