"We will soon have enough available liquid cash to meet all our needs through the end of 2014," IDB Holding Corp. Ltd. (TASE:IDBH) chairman Nochi Dankner told "Globes" today. He said that the sale of 50% of IDB subsidiary Clal Industries and Investments Ltd. (TASE: CII) today would boost IDB's cash reserves by NIS 2.66 billion. The merger of IDB holding company unit Discount Investment Corporation (TASE: DISI) with its subsidiary Koor Industries Ltd. (TASE:KOR) will add another NIS 400 million to IDB's reserves, and dividends from Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) will add another NIS 300 million.
Altogether, IDB will have NIS 3.35 billion in cash reserves, and it is due to repay NIS 1 billion in bonds in 2012, NIS 1.3 billion in 2013, and NIS 1.2 billion in 2014. The outstanding aggregate bond debt of IDB Holding and its subsidiary IDB Development Corporation is NIS 6 billion.
Dankner did not sound particularly perturbed by the 30% fall in the share price of Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) since late March to a five-year low. Koor owns shares in the bank. "The German finance minister said that Europe's economy would emerge from the crisis within a couple of years. I don’t know when the European economy will emerge from the crisis, but it's clear that financial shares will emerge from the crisis sooner than the non-financial economy. I expect a strong recovery," he said.
"Globes": You won't get a margin call on Credit Suisse at CHF 14 per share?
"No. It should also be remembered that, unlike the situation prior to the Makhteshim Agan deal in the third quarter of 2011, we were in crisis over our holding in Credit Suisse because we had a liquidity problem at Koor. Today, Koor has NIS 2.5 billion in cash. If the share price falls sharply lower, there is no problem to inject capital, but we won't reach there."
The Clal Industries deal was made at a 42% on its market price. Why do you think its share price has risen by just 10%?
"The premium is not fantastic in my view, and I'm not impressed by 42%, because of the slump in the value of the holdings and the share prices do not reflect the real value of IDB companies. Nonetheless, Blavatnik made a great deal. I compromised on the price of Clal Industries, because IDB Development's liquidity is very important. We settled the issue of bondholders' fears. I can't remember the last time we had such large reserves to provide security for the market. I am selling Clal Industries for the good of IDB's shareholders and bondholders. I don’t think that this deal will close the 40% gap. In my experience, share prices don’t rise by such amounts. I see the bond prices rising sharply, and that's the important thing."
Shares in both IDB Holding and Clal Industries fell back from their gains following the announcement. IDB Holding's share price rose 3% by early afternoon to NIS 19.25, giving a market cap of NIS 887 million, and Clal Industries' share price rose 4.1% to NIS 11.90, giving a market cap of NIS 1.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2012
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