"The agreement between the bondholders' representatives, which was signed in the dead of night, is a bad agreement, which includes a huge and haircut for IDB Holding, and a totally unnecessary haircut for IDB Development," IDB Holding Corp. Ltd. (TASE:IDBH) chairman Nochi Dankner told "Globes", after the dramatic developments at the company on Thursday night, when the bondholders of IDB Holding and its subsidiary, IDB Development teamed up to take control of the conglomerate away from him.
This is the greatest threat to Dankner's control of IDB since it ran into trouble 18 months ago. Dankner is not giving up. He says that he will continue to fight to keep control of the company, and in the face of the agreement by the two bondholders representatives, he will offer, probably within days, an improved debt settlement to IDB Holding's bondholders, who are shaping up to be the party which will decide the power struggle at the company.
Dankner says that he intends, "to offer IDB Holding's bondholders a better offer than the offer by the IDB Development bondholders representative, headed by York Capital Management, including an additional capital injection into the company."
As for IDB Development, in contrast to the position of its bondholders representative, Dankner continues to assert that the company is solvent and can meet its debts to its creditors. He adds that measures will be taken very soon to improve the company's financial situation, saying, "We have measures in the works to merge Koor Industries Ltd. (TASE:KOR) with Discount Investment Corporation (TASE: DISI), which will inject NIS 450 million into company; the sale of up to half of the stake in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) (about which the company notified the TASE on Friday - E.P.), which will inject at least NIS 1.25 billion into IDB Development; and bringing in an equity investor to invest NIS 400 million in the company. These amounts are on top of the NIS 1.1 billion in deposits which IDB Development currently has."
Dankner says that the agreement reached by the IDB Holding bondholders representative is bad for both companies. If that is the case, why did they decide to turn their backs on him and team up with the IDB Development bondholders representative to take over the company?
"I don’t really understand this," says Dankner. "The IDB Holding bondholders representative are totally ignoring Elsztain's upcoming investment. They want to throw away this money because of York?" He adds, "This is an aggressive foreign fund which bought bonds for 50 agorot on the shekel, and expects to get full repayment on them, and has already made a 30% gain. But this is not enough for York. It wants to take over IDB Development."
"Globes": Has Elsztain been updated on the developments? Has he gotten cold feet in view of the latest developments?
Dankner: "Elsztain has been updated and knows all the details. He is as disappointed as I am by this unilateral move by the bondholders representative. This is not good for the economy or for IDB's employees. Such upheaval is not needed by any of them."
Published by Globes [online], Israel business news - www.globes-online.com - on May 26, 2013
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