IDB Holding Corp. Ltd. (TASE:IDBH) chairman Nochi Dankner promised employees that he will do everything to protect the company, and that it had enough cash to meet its debts. He sent the letter to employees after IDB Holding reported a net loss of NIS 1.3 billion in its financial report for the second quarter of 2012 on Friday, and attached a going concern warning to the report.
"We are going through difficult times. It is not easy for any of us, but I believe and I am confident that we will emerge from this crisis stronger and we are looking forward," wrote Dankner. "IDB Holding has sufficient cash reserves to meet its debt payments for almost a year. The challenge we face is to continue to substantially increase IDB Holding's liquidity. We have been working diligently of late to achieve this objective, and I am confident in our ability to achieve it.
"I intend to continue to take every possible measure to protect the money of everyone who has invested in the group's companies, and to protect the rights of every bondholder and shareholder. I am fighting for this, and I will continue to fight until this is settled. We are working day and night, and we are not deterred against taking the necessary measures. We will act to inject capital, sell assets, continue streamlining and cost-cuttings. We will do whatever is necessary.
Dankner went on to detail the measures IDB has taken to recover and fill its cash reserves. He mentioned the sale of Makhteshim Agan Industries Ltd. to China National Chemical Corporation (ChemChina), as well as the sales of Fundtech, Ham-Let (Israel-Canada) Ltd. (TASE: HAML), and Maxima Air Separation Center Ltd. (TASE: MAXM-M). He also mentioned the raising of capital and the sale of the non-Israeli operations of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). "We sold the controlling interest in one of IDB's main arms, Clal Industries and Investments Ltd. (TASE: CII), which will greatly increase IDB Development Corporation's cash reserves," Dankner wrote.
Commenting on his wish to bring in investors who will inject capital into IDB and boost its liquidity, Dankner wrote, "I am continuing to lead measures which will create a high level of liquidity for all of the group's companies, especially IDB Holding. For this purpose, we are focusing on talks to bring in investors to IDB, and I believe and am confident that worthy partners will invest soon."
Dankner concluded by trying to raise employees and investors morale, writing, "All of us - employees, managers, various parties at interest, bondholders, and shareholders - have a common purpose: to create a work environment of goodwill in which the company will continue to operate strongly to get through the current crisis. In the past, we have known how to deal with crises with determination, diligence, and sacrifice. We will do the same this time too."
IDB Holding's dismal quarter
IDB Holding's net loss rose to NIS 1.27 billion for the second quarter from NIS 883 million for the corresponding quarter. Wholly-owned subsidiary IDB Development's net loss widened to NIS 1.25 billion from NIS 821 million.
IDB Holding also attached to the financial report a going concern warning from its auditors, indicating their doubt about the company's ability to repay its debts due during the next two years. IDB Holding's bondholders now have the right to demand immediate repayment of the debt, or at least to demand a detailed plan from company about the company's sources for meeting the payments.
Following the publication of the financial report, Standard & Poor's Maalot Ltd. downgraded IDB Holding's bonds from BBB to CCC, with a "Negative" outlook.
Published by Globes [online], Israel business news - www.globes-online.com - on September 2, 2012
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