One week after a Tel Aviv judge gave Nochi Dankner additional time to raise hundreds of millions of shekels to save IDB Holding Corporation, a potential foreign investor group has stepped into the picture, and may invest some NIS 500 million in the embattled company if the parties reach an agreement.
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The group, brought together by an ultra-Orthodox accountant from New York named David Waldler, largely comprises wealthy ultra-Orthodox American Jews. Waldler is well known in New York real estate and finance circles.
Sources close to the negotiations said the potential investors had or were close to raising the funds. They are presently holding discussions with Dankner on the future management of the company and the stake he would retain in it if the deal is finalized; he is likely to become a minority shareholder. If Dankner’s negotiations with the group materialize, the money will be deposited into an escrow account.
Dankner faces a deadline next Sunday, when he has to inform the Central District Court handling IDB Holding’s bankruptcy proceedings about a new investor. As part of a debt repayment plan that IDB Holdings previously presented the court, the company's existing shareholders or new investors must inject an additional NIS 800 million into the company, which would then transfer it to its fully owned subsidiary company IDB Development Corporation. Once court approval is received, NIS 500 million will be transferred immediately to IDB Development, followed by another NIS 200 million by the end of 2013. The final NIS 100 million will arrive by the end of March 2014.
According to the debt-restructuring plan, IDB Holding’s creditors would receive 54.12% of shares in the reorganized company, while Dankner and new investors would get the rest. However, due to the large number of creditors who are expected to receive shares in the company, Dankner and his new partners are expected to retain control.
The American investor group recently held talks with Alexander Granovskyi, an ultra-Orthodox Jewish businessman from the Ukraine. Through the charity fund Chabad 770 he maintains indirect control of Israeli company BGI, which retains cash reserves of NIS 220 million. Waldler recently met in New York with Yosef Schneersohn, the new CEO of BGI to discuss the IDB deal, but at this stage Granovskyi appears to be more interested in pursuing his own deal for IDB. Granovskyi is currently in talks to acquire a controlling stake in the company Emblaze as a maneuver to invest its cash reserves of more than NIS 145 million in IDB Holding.
The American group is also trying to persuade the controlling shareholders of Israel's Netz Group to join the deal.
Argentinian Jewish businessman Eduardo Elsztain, who backed out of his planned investment in IDB Holding last month, is also apparently still in the picture. He invested NIS 100 million in 2012 for a 10% stake Dankner's Ganden Holdings -- the parent company of IDB Holding, which was declared insolvent -- making him likely to lose his investment. However, it is unclear if Elsztain wants to or is capable of coming up with necessary funds for the latest IDB Holding deal.