Elsztain will put NIS 200 million into Discount Investment as part of a NIS 500 million rights issue.
IDB Development Corporation Ltd. (TASE:IDBD) controlling shareholder Eduardo Elsztain is attempting to strengthen the confidence of the creditors of IDB Development subsidiary Discount Investment Corporation (TASE: DISI) in his ability to support both companies. He yesterday sent a letter to the boards of directors of the two companies proposing to increase his capital injection into IDB Development, some of which will be used by the company to take part in Discount Investment's rights issue.
In early May, Elsztain made a proposal to IDB including an undertaking on his part to inject a further NIS 100 million into the company in the framework of a financing round of up to NIS 125 million in October. This round was slated to take places in two stages: one in October, and one in November. Elsztain is now proposing to double the size of the issue, in which his share will be up to NIS 200 million.
In addition, Elsztain is proposing that the Discount Investment board issue rights should total NIS 500 million. His proposal follows complaints by Discount Investment bondholders about the company's plan to inject up to NIS 100 million into Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), its subsidiary, as part of an issue of rights. Discount Investment has NIS 4.8 billion in debt, on which it is scheduled to pay NIS 1.3 billion in interest over the years. Most of the bondholders objected to the decision to inject capital into Cellcom, and wondered about the urgency of doing so now, before Discount Investment has completed its business plan.
Published by Globes [online], Israel business news - www.globes-online.com - on June 30, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015
Elsztain