Daily Roundup / IDB Bondholders Want Dankner's Money

No, Azrieli can't have another mall in Be'er Sheva; Psagot likes Israel Corp, whose executives rush through pay changes; El Al's profits soar and Mei Eden's revenues surge.

Bondholders making fresh demands of Nochi Dankner: With the Israel Securities Authority gearing up to question Israeli tycoon Nochi Dankner over suspicions of securities manipulation, it seems his bondholders were getting itchy. It turns out that just before Dankner's questioning by the financial police on Tuesday, representatives of IDB Holding Corporation bondholders delivered radical demands for letting him to retain control of his conglomerate. Among other things the bondholders insist that he inject NIS 600 million – of his own money or from whatever other source – into IDB Holding, the company at the top of his business pyramid. Insofar as is known, Dankner does not have the wherewithal to meet that demand. They also want Dankner to bring the NIS 65 million due to IDB Holding B4 bondholders on December 20 from external sources, not the company itself. The same demand had been made regarding the NIS 35 million owed to B2 bondholders a month ago. That sum ended up being paid through a rights issue. Finally, they demand that any further money to be injected by Argentine businessman Eduardo Elsztain into Nochi Dankner's privately held company Ganden, through which he owns IDB, go straight to IDB Holding instead. So far IDB has not met the demands and the bondholders are threatening legal proceedings.

Azrieli Group can't buy the mall it wanted in Be'er Sheva: The real estate company, controlled by Canadian-Israeli builder David Azrieli, had its corporate heart set on the desert city's One Plaza mall, to join the shopping center it already owns in Be'er Sheva – the Negev Mall. But antitrust commissioner David Gilo ruled that a deal would leave one mall owner in Be'er Sheva, which could lead to higher rental prices for stores. In short, he said a deal could be anticompetitive, and that was that.

Psagot likes Israel Corp: The Israel Corporation filed its third-quarter financials on Tuesday and did better than expected, points out Psagot analyst Noam Pincu. Freight-shipping subsidiary Zim had its best quarter in two years, which helped compensate for continuing losses at electric-car venture Better Place. In fact, Zim netted $16 million as the shipping industry raised prices (in a move marked by industry-wide discipline, a crucial element for shippers since global demand for shipping is still fairly low, Pincu remarked). With Zim, ICL and IC Power the main profit drivers, the Israel Corporation posted $159 million profit for the third quarter, a year over year increase of 5%. Pincu feels the company is trading at a deep discount and repeated a Buy recommendation. 

Israel Corp rushes to beat "executive pay bill": Earlier this month the Knesset approved the executive pay bill, which among other things makes pay dependent on the approval of a majority of disinterested shareholders. The law comes into force on December 12, ahead of which The Israel Corporation is trying to push through new pay packages – to be voted on by the general assembly of shareholders according to the old method, on December 11. The company's board of directors extended the terms of Chairman Amir Elstein and CEO Nir Gilad by three years each and amended their terms. Elstein and Gilad each get 35,000 stock options worth nearly NIS 25 million each. Other officers get options too. The options will be exercisable in three tranches from June 2014 at an exercise price of NIS 2,500 per share, if the shareholders approve the new employment terms. Note that Psagot's 12-month price target for The Israel Corporation is NIS 3,825.

El Al also did nicely in the third quarter: On Tuesday the airline reported $37 million profit, an increase of 79% from the corresponding quarter of 2011. The company ascribes its happy quarterly fortunes in part to efficiency measures. Revenues inched up 0.6% against the parallel quarter to $606 million: while income from passenger traffic increased by 3%, cargo traffic income dropped by 17%. Gross profit grew 31% to $145 million or nearly a quarter of turnover, up from 19% of turnover a year ago. One reason for the increase in margin is that the airline, which was privatized in 2003, had on average 26 less workers in the third quarter compared with a year ago, it explains. And better fleet management saved the company $14 million on fuel costs even though the price of jet fuel was unchanged year over year.

Mayanot profits zoom on strong European sales: The mineral-water company Mayanot Eden, also known as Mei Eden and Eden Springs, on Wednesday reported a 6% year over year increase in revenues to €70.4 million. Sales volume increased in Europe, the company said, boosting operating profit to €8.4 million, from €0.9 million in the same quarter of the year before. Eden said net profit grew 150% from the parallel quarter to 3.6 million euros.

With reporting by Michael Rochvarger, Yoram Gabison and Oren Freund.