By a majority of over 70%, IDB Holding Corp. Ltd. (TASE:IDBH) bondholders have approved the agreement reached with the IDB Development Corporation's bondholders representative, which they call "the alliance of the institutions", the main purpose of which is to wrest control of IDB from chairman Nochi Dankner.
However, an in-depth examination of the distribution of votes shows that IDB Holding's private bondholders, who hold most of the company's debt, were absent from the vote, and the financial institutions determined the outcome.
For example, financial institutions hold most of IDB Holding's Series A and B bonds, which together account for a fraction of the debt - NIS 25 million at par value. 62% of the institutions attended the vote, and a sweeping majority (more than 90%) voted in favor of the agreement. In contrast, private bondholders hold most of the Series C, D, and E bonds, which total NIS 294 million par value. On average, only 16% of the private bondholders voted, although here too, a majority (over 70%) voted in favor of the agreement.
It should be noted that the vote is non-binding. IDB Development attorney Adv. Amir Bar-Tov said, "This is a non-indicative vote, convened in a rush without providing information to the bondholders, and the trustees refused to provide the bondholders with the alternative offered by the company. Only a small minority of bondholders participated in the meeting, not more than 20% of the bondholders. As for biggest bond, Series D, only 70% allegedly voted in favor of the position to move the representatives' agreement forward, which does not meet the minimum provisions of Article 350 (of the Companies Law), which sets 75%. The votes of institutions which hold IDB Development bonds worth far more than their holdings in IDB Holding's bonds were not neutralized, and it is possible that some of them serve on IDB Development's bondholders representative body. There is no doubt that their votes should have been disqualified. It is therefore possible that if this had been done, there would not have been a majority in general."
Published by Globes [online], Israel business news - www.globes-online.com - on June 4, 2013
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