IDB Bondholders Begin Assessing Bids for Control of the Group

Two consortia are vying for control: Nochi Dankner with Ukrainian businessman Alexander Granovksy and Motti Ben-Moshe with Argentinian investor Eduardo Elsztain.

IDB bondholders last night began assessing presentations by the two consortia bidding for control of the group. The final vote is slated to be completed by next Sunday.

Earlier in the day, Judge Eitain Orenstein, whose court is overseeing the process, ordered the bondholders’ vote to proceed immediately as scheduled. He rejected petitions to delay it until after the Knesset votes on the Business Concentration Law, whose terms may affect the structure of the two IDB bids.

Meanwhile, another salvo in the war of words over who is making the most attractive offer for control of the IDB group was fired on Monday by Motti Ben-Moshe, who said the proposal he has offered together with Argentinian-Jewish investor Eduardo Elsztain offers IDB’s creditors greater certainty and a faster turnaround time.

“Our offer contains no contingencies. The closing can be wound up inside of four weeks,” Ben-Moshe, who is making his bid through his own holding company Xtra Holdings, told TheMarker. He spoke a day after Nochi Danker, who is seeking to retain control of IDB in an alliance with Ukrainian businessman Alexander Granovksy, insisted his bid offered better terms because they would be putting up NIS 500 million into IDB by February 15, whether or not their proposal was accepted. The Ben-Moshe-Elsztain offer would entail putting up just NIS 100 million ahead of the restructuring.

But Ben-Moshe rejected Dankner’s comments as deceitful. “Dankner isn’t telling the truth,” Ben-Moshe told TheMarker. “He made his claim based on an author’s error in the report by [court-appointed] expert Eyal Gabbai.” Ben-Moshe said that Gabbai and the court were informed of the error and a correction was sent to all parties, including Dankner.

Both offers entail a combination of fresh capital and debt-for-equity swaps, aimed at lifting the heavy debt burden off the group. But the structure makes the task of valuing them extraordinarily complicated. 
Ben-Moshe noted that his proposal would provide three options to IDB Holding creditors, in the event that he and Elsztain do not follow through with their restructuring proposal. The creditors would then be able to demand the immediate payment of NIS 100 million, or take legal action against Ben-Moshe and Elsztain, or have the two use the money for the bid placed in an escrow fund to receive IDB shares and pay a fine, Ben-Moshe said.

“We have NIS 1 billion in an escrow fund that is completely secure,” said Ben-Moshe, adding that there were no conditions to their proposal that would require any kind of delay, so that it could be completed within the space of a month.

Ben-Moshe emphasized that since all the funds required for his and Elstzain’s restructuring proposal had already been placed in escrow, there was no reason for them to not to carry out their restructuring agreement with IDB’s creditors. He also alleged that the IDB Holding’s latest financial statement showed that Dankner had used more than NIS 32 million of the conglomerate’s money to support his effort to retain control of the company with his proposal. “Nochi is saving his skin with the creditors’ money,” said Ben-Moshe.

The IDB group refused to comment.

Ben-Moshe likewise dismissed the possiblity that Dankner-Graniovsky might turn to the courts to try to block the Elsztain-Ben-Moshe consortium from taking over IDB, if the latter wins. “I’ve heard about this threat,” Be-Moshe said. “I don’t believe a higher court would try to stop the process because it would cause [IDB] to collapse.”

Olivier Fitoussi