After publishing a poor financial report for the second quarter of 2012, which included a going concern warning, IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, held a meeting today with the holders of its A, B, C, D, and E series bonds, in which Dankner asked, through IDB's executives, for a 100-day grace period to find an external investor for the company.
Sources inform ''Globes'' that Dankner, who was not present at the meeting, is holding business meetings in New York, in an attempt to find an investor.
IDB was represented at the bondholders meeting by CEO Haim Gavrieli and the company's legal advisor, Shimshon (Shoni) Albek. Almost 900 seats were prepared in the hall, but only a few dozen people showed up. The atmosphere was calm, and there were no calls made against Dankner or company executives.
"We hope that the bondholders will continue to believe in the company. We're going through hard times, but we're determined to emerge from these times with solutions in hand," Gavrieli told the bondholders. "We reached this state because of the going concern warning that was attached to the financial report for the second quarter, but beyond the warning, the company has sufficient cash to meet its commitments for at least a year."
Gavrieli said that IDB was seeking an investor to inject capital into the company, and he asked the bondholders for more time. "We believe that giving us time to bring in investors is the right thing for all the parties, and we're doing this as quickly as possible. We intend to use every means to protect the company's investors. IDB is an upholder of business ethics, and will remain so."
IDB Holding CFO Eyal Solganik said, "There is something regrettable in current discussion about the relatively small amounts compared with the large economic values on the table. This is a butterfly effect decision, which could drag this magnificent group into bad places."
Commenting on the request by some investment institutions for Dankner to inject NIS 35 million into IDB this week to relieve pressure, Solganik said, "Notwithstanding the going concern warning, the most important point is that IDB's board of directors declared that it does not consider the company to be insolvent. IDB Holding has NIS 198 million in cash. IDB has demonstrated that it can execute large deals within a very short time. The sale of parts of IDB Development will be the basis for any future solution at IDB Holding."
Albek said that IDB has agreed to the institution's request. "The company will deposit NIS 35 million with a trustee in favor of the Series B bondholders to calm things down. This proposal preserves the bondholders' rights."
The Series B bondholders will decide in a few days whether to accept the proposal, given that the alternative is to go for liquidation, an option that appears remote at this time.
Solganik said, "The size of IDB's pie depends on the bondholders' decision. The pie could grow if sales are made or if there is a major change in the markets, or it could shrink, if, because of IDB's complicated structure, a decision is made that harms the company's capabilities and reduces the value of its holdings. The company's headquarters does not agree with the idea of stopping payments. It is premature to make such a decision."
Asked by a bondholder why IDB subsidiary Discount Investment Corporation (TASE: DISI) had acquired Ma'ariv Holdings Ltd. (TASE: MARV-M), Solganik replied, "When Discount Investment acquired Ma'ariv, it was a strong company, but it is now a weak company. It's possible to talk for hours about the circumstances that led the board of directors to approve the deal."
Published by Globes [online], Israel business news - www.globes-online.com - on September 3, 2012
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