IDB Development, controlled by Eduardo Elsztain, filed a petition in the High Court of Justice yesterday against Supervisor of Capital Markets, Insurance and Savings Dorit Salinger. The petition concerns Salinger's decision not to allow IDB Development to mortgage 19% of the shares in subsidiary Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) in favor of its new bondholders (Series 11).
Earlier this month, IDB Development raised NIS 325 million in the offering of its Series 11 bond, but the money will be transferred to it only if the lien on the Clal Insurance shares is approved as collateral. In the petition, IDB development asks the court to order Salinger to appear before it urgently to explain why she will not approve the lien.
IDB Development claims that Salinger's refusal represents a severe, unreasonable and disproportionate infringement of its property rights, and prevents it from receiving the sum raised in the bond offering. It says that the interest payable on the offering proceeds, while it is unable to obtain them and they are held by the Series 11 bond trustee, amounts to over NIS 1 million monthly, in addition to issue costs of NIS 5 million.
"The offering proceeds are required by the petitioner to service its cash flow needs, including, first and foremost, payments that fall due to creditors during this coming September amounting to NIS 91 million, and payments that fall due in the period November-December 2016 amounting to some NIS 160 million. If the petitioner continues to be prevented from receiving the offering proceeds in the very near future, this is liable to cause it great damage, the final extent of which is incalculable," IDB Development writes in its petition, through the law firm of Gornitzky & Co. "In practice, the Supervisor's refusal is perhaps intended to 'punish' the petitioner and 'to settle scores' with it," the petition states, and adds that the justification that the Supervisor supplied for her refusal to allow the lien is that it is liable to harm implementation of the plan for the sale of IDB Development's shares in Clal Insurance, but that this argument is "simply incorrect."
Published by Globes [online], Israel business news - www.globes-online.com - on August 15, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016