The tussle between IDB Development Corp. (TASE: IDBD) controlling shareholders Moti Ben-Moshe and Eduardo-Elsztain continues. Ben-Moshe's Extra Group sent a copy of the letter to the Tel Aviv Stock Exchange (TASE) that he had sent to Elsztain's Dolphin Group, demanding to purchase half the securities bought by Dolphin during the recent rights issue, at the price of the rights issue.
Ben-Moshe also demands to be able to buy the shares that Elsztain transferred to two other companies that he controls, or are controlled by his associates.
Extra said, "The rights issue and the procedures supporting it were a violation of the shareholders agreement and unacceptable conduct and in bad faith. This follows the violation of the shareholders agreement by Dolphin even before the rights issue."
By holding more than half the shares in IDB Development after the rights issue, Elsztain is now expected to have a majority on the board with five directors while Ben-Moshe will be left with just one director representing him (compared with three each at the moment).
Elsztain and Ben-Moshe bought control of IDB Development last year as part of the debt settlement of parent company IDB Holding Corp. Ltd. (TASE:IDBH) that became insolvent under the previous controlling shareholder Nochi Dankner. Elsztain and Ben-Moshe each injected NIS 700 million into IDB Development as part of the settlement and committed to putting another NIS 393 million into the company this year.
Elsztain initiated a rights issue to avoid a legal showdown with IDB's creditors (bondholders and banks) about the company's ability to service its debt. However, Ben-Moshe insisted that the rights issue would not solve the fundamental problems of IDB Development and its subsidiaries, and asked to set an overall strategy for the group before extra cash was injected for the creditors.
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2015
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