1. Nochi Dankner. In early September 2102, immediately after the financial statements of IDB Holding Corp. Ltd. (TASE:IDBH) were released containing a going concern qualification in the auditor's report, I wrote that, in order to preserve his control of the company, "Dankner must now understand that IDB can no longer be a one-man show. The need for an outside infusion of cash requires not only the sale of core businesses, but, most of all, bringing in a partner with deep pockets to the controlling core of IDB itself."
Perhaps Dankner thought otherwise, or perhaps he wanted to do this but failed in the implementation, but in the nine months since, there has been no significant injection of cash into the group, apart from a minor investment by Eduardo Elsztain, with a promise of a much larger amount to come that has been put off time after time and has still not happened.
Dankner is now paying the price of playing for time, as he finds himself up against a coalition of bondholders determined to wrest control from him (IDB Holding has long been insolvent).
Now, the games are over. The pistol that the bondholders have put to Dankner's head forces him to lay on the table, and fast, a genuine proposal better than the one the bondholder representatives will submit to the court. Bringing a partner into the control of IDB Development, the sale of control of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) or Discount Investment Corporation (TASE: DISI) Dankner now needs a dramatic move, some would say a miracle, in order to survive at IDB.
2. Jeremy Blank. Unlike Danker, for whom IDB is all he has both business-wise and personally, for Blank, the representative of York Capital in Israel who is leading the takeover bid, this is just another deal. York has already made a profit on paper of NIS 100-200 million on the investment it made in the bonds of IDB Development. But Blank thinks he can make more, and he wants to get to the money as quickly as possible.
Blank has nothing personal against Dankner, and as far as he is concerned it's unimportant who manages the company instead of him. He's not looking for control. From his point of view, turning a profit is the supreme goal, and Dankner, who seeks to preserve the group in its current format, is only an obstacle in his way.
If the court approves the debt arrangement proposed by the IDB bondholders, we can expect the appointment of a CEO on their behalf who will act as de facto liquidator of the concern, in order to maximize the gain that can be derived from selling off its assets. After that happens, Blank will look for the next opportunity.
3. Yitzhak Tshuva, Zehavit Cohen, Yair Hamburger. You would have to be naïve to believe that the debt arrangement formulated by the IDB bondholder representatives did not get the go ahead from the tycoons behind the investment institutions. This means mainly Yitzhak Tshuva (who controls The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) and Excellence Investments Ltd. (TASE: EXCE)), Zehavit Cohen of Apax Partners (Psagot Investment House Ltd.)), and Yair Hamburger (Harel Insurance Investments and Financial Services Ltd. (TASE: HARL)).
Up to now, it was commonly thought that, despite IDB's difficult position, Dankner enjoyed the support of the economy's wealthiest magnates, with some of whom he has had extensive business ties over the years. Their support for the IDB bondholders' proposal, even if it was passive, means that something has changed. In Dankner's case, the solidarity has come to an end, and it would appear that even his co-tycoons reckon that he is fighting a losing battle.
4. The lawyers, the trustees, the consultants, the valuers. Anyone who thinks that the transfer of control in IDB will take place next week is badly mistaken. Experience shows that we are in for long months of court hearings, legal opinions this way and that, marathon negotiations, stormy shareholder and bondholder meetings, and angry letters, that will provide a nice living for scores of lawyers, trustees, consultants, and valuers, all out of the company's cash, at the bondholders' expense. It will therefore come as no surprise if, on the day that the IDB debt arrangement is eventually approved, we discover that there's rather less cash to go round.
Published by Globes [online], Israel business news - www.globes-online.com - on May 27, 2013
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