This morning, Eduardo Elsztain submitted his revised proposal for a debt settlement in the IDB group, following talks over the past two weeks with the series 14 bondholders. Elsztain is offering to raise the cash injection into IDB by NIS 60 million to NIS 360 million, in order to ensure payment of interest to holders of the new bonds to be issued for 2021-2022.
In addition, Elsztain is proposing to the series 15 bondholders to swap the bonds they hold (after partial or full repayment of the principal in 2020) with new, longer bonds secured on 5% of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). There is no material change in the offer to holders of the unsecured series 9 bonds, apart from a proposal that they should receive 50% of the shares in IDBG if the sale of this stake to Property and Building Ltd. (TASE: PTBL) is not approved by the latter's shareholders.
Earlier this month, Elsztain submitted a proposal to IDB's bondholders that included a cash injection of NIS 300 million and a NIS 600-700 million haircut, that is, 30-35% of the total debt.
Elsztain, who bought the IDB Development-Discount Investment group in the previous debt settlement, has already injected the huge sum of NIS 3 billion to cover debts that piled up during the period that Nochi Dankner controlled the group, but even that amount has proved insufficient in the face of the group's high interest payments and the decline in value of some of its main assets.
At the end of March, IDB reported a negative net asset value of NIS 1.2 billion and a leverage ratio of 287% - in other words, its liabilities were almost three times its assets. In its 2019 financials, it reported a deficit on shareholders' equity of NIS 335 million.
The aim of the proposed settlement is to preserve Elsztain's control of Discount Investment (through his investment vehicle Dolphin and IDB Development). Discount Investment holds a variety of assets, the main ones being 26% of supermarket chain Shufersal Ltd. (TASE:SAE), 47% of telecommunications company Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), 69% of real estate company Property and Building Ltd. (TASE: PTBL), 40% of citrus grower and exporter Mehadrin, and 61% of technology group Elron Electronic Industries Ltd. (TASE: ELRN).
Published by Globes, Israel business news - en.globes.co.il - on June 21, 2020
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