IDB Development Corporation, Nochi Dankner’s financially troubled holding company has sold off its last stake in Clal Industries.
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IDB said it sold the 10.6% interest to institutional investors Menora Insurance and the Altshuler Shaham Investment House for NIS 13.30 a sharem, totaling NIS 223 million.
Clal shares lost 3.9% to NIS 14.41 on the Tel Aviv Stock Exchange.
in the past year Menora in the past year has lent NIS 150 million to IDB Development against collateral that includes shares in Clal Insurance and Discount Investment Corporation, two IDB Development subsidiaries.
IDB Development sold its controlling stake in Clal Industries last July to the U.S. Jewish billionaire Len Blavatnik for NIS 1.27 billion, representing a company valuation of NIS 2.55 billion. Since then, Clal Industries shares have gained 25%, boosting the holding company’s TASE market capitalization to NIS 2.55 billion as of Tuesday.
IDB Development bondholders were due to meet later on Wednesday to discuss the sale. While they want to see the company generate cash to meet repayments, they are concerned that at current valuations IDB Developments’ total assets are worth NIS 1 billion less than its total debt. They will be examining the sale and whether it was fairly valued.
Once a key part of IDB’s extensive portfolio of companies, Clal Industries' holdings include the Nesher cement monopoly and a group of biotechnology and high-tech companies. Dankner was forced to sell Clal Industries in order to raise cash for his indebted IDB group.
IDB Development is expected to record a NIS 10 million loss on the sale for the fourth quarter of 2012 because Clal Industries shares only began to climb recently. But it will likely post a NIS 22 million gain in the first quarter of 2013, it said.
The sale of the Clal Industries stock as well as some NIS 60 million in dividends it has been paid from Clal insurance will increase IDB Development’s cash by NIS 300 million to NIS 1.1 billion. That will help it avoid its auditors issuing a “going concern” warning on its 2012 financial statements due out at the end of the month. IDB Development owns banks and bondholders some NIS 6 billion.
Nevertheless, IDB Development bondholders, who are seeking to wrest control of the company from Dankner, have expressed opposition to divesting subsidiaries, as IDB Development’s Discount Investment holding company unit has done.
Representatives for the bondholders have said that Dankner was selling his assets, such as NIS 150 million in shares in Cellcom Israel, Koor Industries and Property & Building, too cheaply in order to raise cash.