Nochi Dankner is offering to inject NIS 841 million into IDB Holding Corp. Ltd. (TASE:IDBH) to keep control of the company, but has not said where he will get the money.
Three days after IDB's great hope, Eduardo Elsztain, decided not to inject $75 million into the company, it announced a new proposal for a debt settlement, which includes an NIS 841 million capital injection, the transfer of 54% of IDB Development Corporation to IDB Holding's bondholders, and the full conversion of the balance of IDB Holding's bond debt against a cash payment of NIS 175 million by the company to the bondholders. IDB proposes that, when the settlement is closed, all of its bonds will be delisted, and all of the company's financing agreements with the banks will be cancelled.
"The financial advantage for the creditors is clear," said IDB in a statement. "The potential financial value of the proposed settlement is higher than the potential value of other alternatives. IDB Holding's bondholders should benefit from the potential of capital creation in the company's assets, which are leaders in the economy with substantial betterment potential. Keeping the possibility of improving these assets and benefiting from them, instead of selling them as part of a liquidation or a forced sale, reflects substantial potential for the company's bondholders. The company also employs thousands of workers, providing job and financial security, which should be considered in any proposed settlement."
IDB Holding says that the cash injection will be in installments, without mentioning the source of the money. It proposes the first injection will be made on NIS 500 million when the debt settlement is approved (assuming it is), NIS 200 million will be injected by the end of 2013, and another injection of NIS 100 million by March 31, 2014.
IDB Holding will then transfer NIS 800 million to subsidiary IDB Development. IDB Holding says, "The liquidation of IDB Holdings is a complex process, which involves high costs, which will reduce the sources available for IDB Holdings' bondholders. This process is liable to also harm the company's various holdings, partly because of the uncertainty which will result about control of the company and the absence of consistent and organized management. Most importantly, the sale by a liquidator takes a long time. There is no question that until the liquidation of IDB Holding would be completed, IDB Development's bondholders would end up taking over a company emptied of its assets."
Published by Globes [online], Israel business news - www.globes-online.com - on July 7, 2013
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