Judge Delays IDB Creditors Vote

Delay gives controlling shareholder Dankner time to raise some NIS 800 million.

A crucial preliminary vote by IDB Holdings Corporation bondholders, on a debt arrangement, was postponed by Tel Aviv District Court Judge Eitan Orenstein on Wednesday to see if Nochi Dankner’s beleaguered holding company would succeed in selling Clal Insurance, and/or raise some NIS 800 million from outside investors.

Orenstein ruled that bondholders would have to delay their vote until August 11.

The delay gives Dankner and IDB Development Corporation, the IDB Holding unit that directly controls Clal, time to close a deal to sell a 30% stake in the insurer. Orenstein’s decision came just a day after IDB said Charoen Pokphand, a Thai company controlled by ethnic Chinese billionaire Dhanin Chearavanont, had agreed to buy the stake for NIS 1.4 billion.

IDB Development owns a 55% stake in Clal, but as part of a debt settlement being weighed by the courts, IDB has until August 22 to sell at least half of that. Orenstein also ordered IDB Holding to provide the court and its investors a report regarding the fate of the sale no later than August 11.

"[A delay] would be better than the option of bondholders voting on different plans and learning after the fact that there is a substantive change in the proposals … and that there will be no choice left but to hold new votes for an agreement with creditors," Orenstein said in court.

A preliminary vote for IDB Holding's bondholders had been scheduled for next Sunday, where they would have been asked to approve a revised debt-restructuring agreement that includes removing Dankner from the helm of the company.

Orenstein noted that in addition to the question of the Clal sale, IDB Holding was in talks with two potential investors, and that if either one reached a formal agreement, it could influence the vote at the upcoming meeting.

Ofer Vaknin