Dankner offers bondholders NIS 640 million cash

A new offer to IDB group bondholders includes a larger cash injection, greater equity, and a NIS 700 million new bond issue.

Nochi Dankner, who controls IDB Holding Corp. Ltd. (TASE:IDBH), is counter-attacking. Yesterday evening, Dankner presented a new outline of a debt arrangement for IDB Holding's bondholders, after the latter announced a week ago that they were abandoning the outline arrangement they had reached with him and his partner Eduardo Elsztain, in favor of a joint debt arrangement with the representatives of the IDB Development bondholders, the main plank of which is the seizure of control of the IDB group from Dankner.

The most important part of the new proposal from Dankner is the cash component, which amounts to NIS 640 million. NIS 375 million will be injected directly into IDB Holding on the day that an agreement is signed between Dankner and Elsztain, NIS 165 million will be distributed from the company's own cash (which totals some NIS 185 million), and the remaining NIS 100 million will be paid over a period of two to four years.

Under the new proposal, the bondholders will receive a 10% equity stake in IDB Holding and a further 10% in IDB Development. A new bond series amounting to NIS 700 million will be issued to the bondholders, bearing 5% CPI-linked annual interest, with repayment between 2017 and 2021.

In addition, IDB Holding undertakes to introduce greater liquidity into IDB Development, to the tune of NIS 400 million, through a new injection of cash, apparently by bringing in an additional investor, and/or through the sale of part of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). IDB Holding says that, in addition to this arrangement, the merger between Discount Investment and Koor Industries Ltd. (TASE:KOR) will proceed, in order "to strengthen Discount Investment without harming Koor's creditors."

Just before midnight on Friday, IDB Holding and its subsidiary IDB Development published their financial statements for the first quarter of 2013. For the first time, IDB Development statements carried a going concern warning. IDB Holding's statements have carried such a warning since the second quarter of 2012.

Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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