Tel Aviv District Court Judge Eitan Orenstin today ordered Nochi Dankner and Eduardo Elsztain to submit a debt settlement proposal for IDB Holding Corp. Ltd. (TASE:IDBH) within two months and to sell the holding of subsidiary IDB Development Corporation in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) by August 22. Money to meet bond payments will be deposited in a trust account. The judge also postponed the next bond payment to June 23.
IDB Holding's share price rose 6.6% to NIS 8.51 after Judge Orenstin's announcement that Dankner and Elsztain will keep control of the company for now.
"Last night, I received the notices," said Judge Orenstin about Dankner's improved offer to the bondholders. "I'm a little disappointed that the parties did not reach a deal. I expected dialogue. I heard from the observer that you are scared from talking with each other, and this is unacceptable. An attorney with years of experience struggles to make an offer… I know that it sometimes doesn’t work, but at least try to reach agreements when the fate of so much of the Israeli public is in the balance. Instead of talking, each party is digging in its position. I hope that my remarks will be understood."
Orenstin added, "I reiterate that the parties should reach a broad agreement, show maturity and responsibility about the fate of the public's money, and ignore past investors. An agreement filed with the court is better than a legal ruling."
Orenstin warned Dankner that if he does not sell Clal Insurance in time, "there will be no alternative but to impose on the company an arrangement or compromise for a settlement, which I do not reject out of hand."
After the hearing, Dankner told the media that the deadline given to sell Clal Insurance was "short and challenging, but we will try to carry out the task."
Orenstin added, "As for insolvency, there is no winning answer, which I why I appointed an expert and observer on behalf of the court. I believe that the court should find a balance between the parties. A valuation for IDB Development has to be determined with further certainty that the company can meet its commitments until 2014. In my opinion, the equilibrium depends on IDB Development's ability to sell its assets to ensure cash flow, otherwise it cannot meet its commitments through the end of next year. In the coming period, its holdings in Clal Insurance must be sold, which is why I decided to give the company the chance to complete the sale of its holding in the insurance company."
Orenstin hinted at intentions on Thursday, when he said, "If within a few months, IDB Development is unable to sell its holdings in Clal Insurance, this will be grounds for insolvency. The net value of the assets set by expert Eyal Gabay for the company is NIS 500 million. This is not clear cut; I believe that the company is right when it says that the expert opinion cuts the ground from under the feet of bondholders representative's petition."
Dankner and Elsztain apparently got the hint, and over the weekend, they improved their offer to the bondholders. Elsztain signed a letter of commitment to transfer money to a trust account for IDB Holding, which he had refused to do until now. Dankner also presented a letter of commitment to undertake steps to strengthen IDB's capital, including the raising of NIS 800 million in capital and the sale of half of Clal Insurance under a timetable which if he misses, he will lose control of IDB.
Regardless of Orenstin's ruling, one thing is clear: Dankner will have to postpone tomorrow's NIS 500 million bond payment by IDB.
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013