There is never a dull moment in the IDB Holding Corp. Ltd. (TASE:IDBH) debt settlement saga. On Sunday, "Globes" reported that IDB's bondholders and trustees were in advanced talks with Argentine businessman Eduardo Elsztain to invest NIS 770 million in the company in exchange for 51% of wholly-owned subsidiary IDB Development Corporation. The other 49% of IDB Development will be distributed to IDB Holding's bondholders, who just hours earlier, voted to take over the company from chairman Nochi Dankner.
Elsztain's aides today floated the names of US billionaires Michael Steinhardt and George Soros as possible participants in his investment in IDB, provided that the bondholders accept the offer. The sources said that Steinhardt and Soros would receive 25% of IDB Development. Elsztain made joint investments with Soros in the early 1990s, including in real estate developer Alrov (Israel) Ltd. (TASE: ALRO), controlled by Alfred Akirov.
The negotiations with Elsztain bypass Dankner. After an earlier investment of $25 million in IDB, Elsztain promised to hold talks only with Dankner.
Today, Elsztain's representatives told the IDB bondholders and trustees, and the experts on behalf of the court, that he had no agreement with Dankner. In addition, if Dankner wants to be a part of the investor group, he is invited to participate, provided that he brings money. Elsztain's representatives said that, even in this case, Dankner could not serve as IDB Holding's chairman or vice chairman.
Elsztain's offer reportedly includes a $75 million (NIS 270 million) immediate payment to IDB's trustees, and a $25 million (NIS 90 million) payment to the trustees within 60 days of the vote on the debt settlement. The balance of the money will be paid within six months of the vote, or on the day the shares are allotted, whichever comes later.
The trustees are expected to submit Elsztain's offer to a vote by IDB's bondholders at a meeting on Tuesday. Sources inform ''Globes'' that while the trustees favor Elsztain's offer, the IDB bondholders representative is split, due to worries that he may find it difficult to finance the deal. This means that if the trustees succeed in getting the bondholders to vote in favor of the offer tomorrow, it might raise questions about the relevance of the institution of the bondholders representative.
Although the proposed investment by Elsztain is less than what Dankner is offering the bondholders in his agreement with Alexander Granovsky, under which BGI Investments (1961) Ltd. (TASE: BGI) will invest NIS 826 million in IDB, the bondholders prefer Elsztain because they believe that there is a better chance of a deal with him materializing. This is because he has already invested $25 million in IDB, and because he already has a permit from the Ministry of Finance's Capital Markets, Insurance and Savings Division to become part of the controlling core in an insurance company. This point is important after CP Group withdrew from the deal to acquire Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and the small likelihood that the Insurance Supervisor will grant such a permit to Granovsky.
On Sunday, Tel Aviv District Court Judge Eitan Orenstin ordered Dankner to deposit NIS 500 million within a week as a condition for granting an extension for drawing up a debt settlement for IDB. Otherwise, the company will be transferred to the bondholders. The judge also permitted the IDB Holding's preliminary creditors meeting to go ahead on schedule later on Sunday. (At that meeting a decisive majority of bondholders voted to take IDB from Dankner and sell IDB Development shares to an external investor). Judge Orenstin also reaffirmed the date for deciding the fate of the company - next Sunday, August 25.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2013
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