In 1990s horror movies, there was sometimes a crazy scene in which someone is imprisoned in a sealed room, when the walls start to move together and slowly close in on him. The trapped character gets more and more alarmed as the walls get closer, the clock ticks, and if no way out is found (and none seems handy) it will end in disaster. The audience is tense: something dramatic must happen, and it can't be good. Unless, before the moment that the space becomes so small that the character can't stay in one piece, something extraordinary and unforeseeable occurs. As we said, something has to happen.
Nochi Dankner is the trapped character in an ever shrinking cell in his own private horror movie. Since the moment that Dankner's financial empire started to sink, and the chances of it meeting the chain of huge debts it owed its creditors started to recede further and further, Dankner has been trapped in an ever narrowing space, and the clock has started to tick. All those involved, including the bystanders waiting for what will happen with baited breath, know that the drama has now been ratcheted up a notch. Something has got to happen. Simple logic, and Hollywood screenwriters, demand that the next move should come from the hero himself: he will try to dismantle the floor/ceiling to find a secret escape hatch, or to wedge the walls to stop their progress. Anything, just not to sit there helplessly, waiting for a miracle.
Dankner's urgent trip to Argentina a few weeks ago in a an attempt to sign an agreement with Eduardo Elsztain was apparently meant to be the last minute saving gambit, but it failed, and now the furniture in the room is starting to splinter as the walls close in and crush it. The agreement between the IDB Development bondholders and those of IDB Holding to seize control of the concern from Dankner and transfer it to themselves is deceptive: formally, Dankner has still not lost control, direct or indirect, over the companies he owns. In practice, Dankner has lost control, at least over the way things are developing. He no longer dictates the pace of events.
The agreement in question elicited a hysterical response from Dankner, confirming that he is on the defensive. Now, old discords are surfacing between the legitimate management of the group and the bondholders who, until lately, were partners in the undertaking, allies committed to the success of the business. "A hostile move", "a shoddy deal" in the diplomatic code of the business world, there are no louder imprecations than these. Perhaps the breaking of the code is another sign of the break-up of the concentration of control in the Israeli capital market. Up until now, one did not speak ill of one's rivals, because there was no real rivalry between players likely to be tomorrow's partners n the next parties at interest deal.
The decline of the IDB group is owing, among other things, to Dankner's character as a gambler who risked more and more assets with the aim of scoring one success that would pull the whole cluster of companies out of the mire. It turns out that there is a substantial difference between the former golden boy and the Las Vegas gambler. Anyone sunk in a game of roulette knows that sometimes one big bonanza can cover up for a long series of failures. But in Dankner's case, the loss of control of just one level in the pyramid could cost him the whole edifice. The chain of holdings, it emerges, is only as strong as its weakest link. Futhermore, the huge effort invested in keeping the levels separate from one another now turns out to have been in vain.
Published by Globes [online], Israel business news - www.globes-online.com - on May 26, 2013
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