Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) has completed the sale of Clal US Holdings Inc., through which it holds Guard Insurance Group, to National Indemnity Company of the Berkshire Hathaway group. Clal Insurance, a subsidiary of IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, received a gross 865 million in the sale. It states that had the transaction been completed at the end of June, it would have reported a net post-tax gain of NIS 72 million. This amount will be adjusted to take into account profits at Clal US Holding since that date and an additional pre-tax gain totaling NIS 13 million, mainly from exchange rate differences.
Clal Insurance says that it will use the proceeds from the sale, subject to approval of its board of directors, for the following purposes: to repay NIS 230 million on the principal of a bank loan, which is a material debt of the company (after this repayment, the loan will cease to be a material debt, and the loan's balance of NIS 230 million will be rescheduled); to inject NIS 200 million into subsidiary Clal Insurance Ltd. to strengthen its capital; and to distribute a dividend to the company's shareholders in an amount to be decided by the board of directors.
Clal Insurance also intends to repay to a bank that is a party at interest in the company, NIS 50 million of its debt to that bank.
Clal Insurance added that subsidiary Clalbit Finance Ltd. was considering an issue of NIS 200-300 million in deferred notes, which will be recognized as hybrid tier-2 capital, through an offering to investment institutions, by expanding a series of deferred notes previously issued by Clalbit Finance. Proceeds of this offering, if held, will replace subordinate tier-2 capital which is due to be repaid over the next two years, and will serve to strengthen the capital base of Clal Insurance.
Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2012
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