IDB Holding Corp. Ltd. (TASE:IDBH) is in upheaval. The bondholders of subsidiary IDB Development Corporation will today petition the court to impose a debt settlement on the company, which is liable to cut the ground from under the feet of the banks and other creditors at the apex of Nochi Dankner's business pyramid. IDB Holding and IDB Development's bonds fell by up to 11% in early trading on the TASE.
If, after the proceedings, IDB Development's bondholders take over the company, the banks and other creditors of its parent company IDB Holdings, of Ganden Investments Ltd., through which Dankner controls IDB, and of Tomahawk Investments Ltd., through which he owns Ganden, will be left without real assets and will be able to collect only a small fraction of their debts.
The IDB Development bondholders representative body, comprising Psagot Investment House Ltd., The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), and York Capital Management - has been saying for a long time that IDB Development is insolvent. The company counters that it can repay its debts and that the bondholders representative wants to take over its assets through an imposed settlement. IDB Development owes NIS 6 billion, including NIS 4 billion to its bondholders and the rest to banks and two insurance companies, against which there is collateral.
On Friday, Bank Leumi (TASE: LUMI) withdrew its proposed debt settlement with Dankner, which means that the bank can exercise its lien on 30% of IDB Holding's shares. If the banks does so, Dankner will lose control of IDB, But since IDB Holding's main asset, IDB Development, is taken over by its bondholders, the lien will be essentially worthless.
Meanwhile, there is the question of Eduardo Elsztain's $75 million investment in Ganden. He is reportedly insisting that the company must reach a debt settlement with the banks, including a NIS 150 million write-off by Bank Leumi, as a condition for exercising his option to invest in the company. Now that the bank has withdrawn the write-off, the situation is even more complicated.
On Friday, Dankner said that he believed that Elsztain would make the investment. Today, IDB Holding notified the TASE that meetings would be held with Elsztain this week to move ahead on the investment in Ganden.
Published by Globes [online], Israel business news - www.globes-online.com - on April 21, 2013
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