IDB Development Corp. (TASE: IDBD) controlling shareholder and chairman Eduardo Elsztain is close to delisting the company. The Argentinean businessman has nearly obtained the agreement of IDB Holdings bondholders for his offer to purchase, which he is committed to as part of the May 2014 bond settlement.
In the past two weeks, talks have intensified with an agreement close at hand, which if signed will make IDB Development a private company with all its shares owned by Elsztain and only and only its bonds traded on the TASE. Reacting to the news, IDB Development's share price rose 44.82% today, giving it a market cap of about NIS 900 million. Even after today's sharp rise, it is still 70% below the share price when it began trading in May 2014.
Elsztain, who holds 81.7% of IDB Development's shares, is committed to the IDB Holdings debt settlement (IDB Development's former parent company) and he filed a purchase offer for 64 million shares held by the public (currently half of the minority stake holding) for NIS 512 million at a price of NIS 8 per share 8 times higher than the share price this morning. However, IDB's urgent need for cash and the huge gap between the share price and the purchase to offer price (as of the end of last week) has obligated the sides to find a creative solution.
According to the agreement being formulated, if approved, then the alternative plan for issuing shares to the public will be cancelled and Elsztain will inject NIS 500 million into IDB Development, mostly for a share allocation and the remainder for a bond allocation from the Series 9 bonds.
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2016
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