York Capital Management's Israeli representative, Jeremy Blank, has been under verbal assault in the media from IDB Holding Corp. Ltd. (TASE:IDBH) controlling shareholder Nochi Dankner and the company's executives. York Capital owns 20% of IDB Development Corporation's bonds. Blank, who is handling the coordinated takeover of IDB by its bondholders, hears that he represents a vulture fund which does not care about the fate of the employees at the base of IDB's pyramid (such as Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), Shufersal Ltd. (TASE:SAE), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and Property and Building Ltd. (TASE: PTBL).
Blank refuses to speak with the media. "At a personal level, of course he is hurt," said one of Blank's associates. He is a naive guy who immigrated to Israel when he was 27 with his wife (who has since died) and son. He loves Israel, is very proud of the investments here, like the investment in Psagot Investment House Ltd., which was acquired when it had 120 employees, and which was sold to Apax Partners with almost 1,000 employees. This assault is unpleasant, to put it mildly, but if anyone thinks that it will break his spirit, doesn’t understand Jeremy's determination."
Following last Thursday's reports that the bondholder representatives of IDB Holding and its subsidiary IDB Development had joined forces, Dankner, his back to the wall launched a media assault. In an effort to win public support against the move, he and his aides focused their umbrage at the foreign private equity firm, York Capital, whose business includes the acquisition of debt of distressed companies. In Israel, besides investing in IDB Development's bonds, it has acquired substantial debt positions in Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT), controlled by CEO Mordechay Zisser.
" This is an aggressive foreign fund which bought bonds for 50 agorot on the shekel, and expects to get full repayment on them, and has already made a 30% gain," Dankner told "Globes" on Sunday.
In another media interview, Dankner said, "York's only objective is to make a fast buck, and it has no intention of waiting for the debt payment's maturity. I and my partners acquired Israel's biggest concern at a huge investment; where was York Capital then? Did anyone know them? Are they Zionists? Do they care about the 40,000 employees at IDB's companies?"
"The foreign funds are cannibals," said a capital market source toeing Dankner's line. "They're only interested in the profit, and they'll make a deal with Satan just to make a profit. Jeremy will start selling IDB's assets one by one and make a bundle of money."
Blank's aides are infuriated by this. "To say that York and Blank are more dangerous to the employees than Dankner is pathetic," responded an associate. "It's like saying that Dankner saved Ma'ariv's employees. After all, Dankner is the man who pulled dividends from the concern's companies into his private companies through which he controls IDB, harming them."
"The anxiety about 40,000 employees at Cellcom, Shufersal, etc. emerged under the previous ownership, which emptied these companies' of their cash in order to pay debts. York Capital's move is intended to rehabilitate IDB Development and IDB Holding's balance sheets. Any settlement that York proposes will include a substantial reduction of the companies' leverage, either through the sale of financial holdings, such as Credit Suisse, or by other means. York Capital is much stronger than Dankner, and if it has to inject capital, it can do it. The condition of the companies will be no worse than under the hands who paid huge salaries to the CEOs while emptying the tills."
Another Blank associate said that, while the struggle over IDB might be seen as personal, that is not the case. "Jerermy did not come to toss out Dankner or to take anything from him. But to hold billions in Credit Suisse shares by such a highly levered company isn't something that Jeremy understands, nor the raising of capital for Ganden, IDB Holding, IDB Development, and other very bizarre things. There is no personal element in taking IDB away from Dankner, but when the controlling shareholder of a bankrupt company doesn’t bring money, he's out of the game."
"The move at IDB is part of York Capital's practice; its expertise," said a source familiar with the personalities. "It has clients and it has to maximize its investment in these bonds. It has patience and money - two things that Dankner lacks. It's sitting on a lot of money, and in the past year, it made a thorough study of the companies at IDB."
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2013
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