IDB Development Corp. Ltd. controlled by Nochi Dankner, has held initial talks with US private equity funds KKR & Co. LP (NYSE: KKR) and Prudence Holdings Inc. regarding a loan, sources inform "Globes." The talks follow the latest twist in the IDB drama with the dramatic withdrawal of Argentinian businessman Eduardo Elsztain late Thursday night from a planned investment of $75 million in the troubled holding company.
Two months ago KKR and Prudence offered IDB a $400 million loan - each would put up $200 million - over six years at an annual interest rate of Libor plus 9.5%. However, talks between the two sides did not develop, probably because of opposition from Dankner and IDB's management to the loan's aggressive conditions. These conditions included a lien on the shares of IDB's main companies Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), which according to a court order must be sold by August 22, Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), and Shufersal Ltd. (TASE:SAE).
The funds also demanded an option on 15% of IDB shares, a significant change in the corporate governance of IDB, and involvement in management of the company, mainly by the placement of the funds' representatives in the company and close work with IDB's management to improve the value of assets.
KKR and Prudence are believed to still be interested in implementing the loan deal.
In any event the pressure is mounting on Dankner who must today submit to the court an outline of the planned debt settlement.
Published by Globes [online], Israel business news - www.globes-online.com - on July 7, 2013
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