IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, has made a last-minute attempt to reach a settlement with its bondholders, hours before today's court hearing in the Tel Aviv District Court in which Judge Eitan Orenstin is due to decide the group's fate.
A petition filed by the company yesterday evening states that Eduardo Elsztain signed an undertaking on Friday to transfer the money he had earmarked for investment in IDB Holding to a trustee account. On Thursday, IDB asked the court for a further extension in order to present the new arrangement to it and to call a bondholders meeting on the matter.
According to an announcement by IDB, Elsztain signed an undertaking to the company committing himself to making his investment in stages via Dolphin Fund, which he owns, into a designated trustee account for the bondholders.
Elsztain undertakes to deposit $25 million into the account within fourteen days of reaching a detailed agreement, and the remaining $50 million within sixty days of the agreement being approved by the court.
The company says that the signing of the undertaking solves the two main problems in the negotiations between it and the bondholders: the uncertainty over Elsztain's investment; and the lack of any reference to an injection of cash into IDB Holding subsidiary IDB Development. A second undertaking signed by Elsztain, relating to IDB Development, speaks of "a set period of quiet lasting a few months during which the company will set out to raise capital and will sell part of its stake in Clal Insurance." IDB Development's financial statements have carried a going concern warning since the second quarter.
Under this second undertaking, Dankner and Esztain commit to "significant strengthening of IDB Development's capital structure" through capital raised from them or from third parties amounting to NIS 800 million.
The representative of the IDB Development bondholders, who seek to take over the company, dismissed the undertakings as "the daily spin" and as "written on ice and dependent on countless conditions", and as designed only to gain time, and said that they amounted to acknowledgment that the company was insolvent.
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013