No New White Knights for IDB Have Emerged

IDB bondholder representatives say Argentinian businessman Eduardo Elsztain may reconsider his proposal for the company following fateful court ruling last week.

No new bidders for control of Nochi Danker’s IDB Holding Corporation have emerged in the week since a Tel Aviv court extended the deadine for a rescue plan for the indebted conglomerate, sources close to the IDB bondholders said on Sunday.

On the contrary, the sources said that Argentinean real estate mogul Eduardo Elsztain is likely to drop out of the alliance he had formed with the bondholders to take control of IDB. If so, that would leave the partnership between Dankner and the Ukrainian-Jewish businessman Alexander Granovsky as the only rescue plan on the table, apart from a possible decision by Tel Aviv District Court Judge Eitan Orenstin to hand over the group to bondholders in a debt-for-equity swap.

Last week Orenstin set October 20 as the deadline for debt-restructuring proposals, saying he hoped the extra time would allow other offers to emerge, in addition to the Dankner-Granovsky and Elsztain proposals.

Dankner’s IDB group owed about NIS 8 billion to bondholders and banks.

Sources said on Sunday that Elsztain made clear through his representatives in Israel that he would likely rescind his offer to purchase a 51% stake in a restructured IDB Holding Corporation for NIS 770 million, turning over the rest to creditors. His representatives told the bondholder trustees that he was disappoiinted with Orenstin's decision, which he contended would serve as a basis for him to reclaim the $75 million he deposited into an escrow account without incurring any penalty.

However, an attorney representing Elsztain told the trustees that because of bondholders continued to show support for Elsztain's plan, he would keep his money in the escrow account until the end of September.

In his ruling, Orenstin rejected bondholders' petititon that IDB Holding's assets be distributed to creditors, which was crucial element of Elsztain's plan to take control of the company. The businessman made clear last week to the trustees that he would follow through with the next step of his agreement with bondholders and deposit an additional $25 million into the escrow account only 14 days after IDB Holding's assets were distributed, as per their original agreement.

This leaves that Dankner-Granovsky plan as the only proposal on the table. Under it, Granovsky would invest NIS 500 million through Emblaze, a company he recently acquired.

Olivier Fitoussi