Nochi Dankner set to lose control of IDB

By
May 25, 2013 19:00

IDB bondholders reach agreement that may oust Dankner from controlling the Israeli conglomerate, which controls companies such as Cellcom, Shufersal.

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 Part of the pyramid controlled by Nochi Dankner's

Shufersal (R370). (photo credit: REUTERS/Amir Cohen)

IDB Group bondholders reached an agreement overnight Thursday that may oust Nochi Dankner from controlling the Israeli conglomerate, which controls companies such as Cellcom and Shufersal.

The bondholders from two tiers of the pyramid conglomerate, IDB Holdings and IDB Development, agreed to convert bonds to stocks and merge the two companies, thus wresting control from Dankner. IDB Development bondholders are to write off NIS 1.8 billion of its debt and get 90 percent of its shares.

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IDB Holdings bondholders are to get 10 percent of the new company’s stock, which will be still be called IDB Holdings, plus the NIS 200 million in cash the company currently holds.

The deal needs court approval to move forward, but the united front is bad news for Dankner.

The bondholders are reportedly seeking court approval to appoint Eyal Gabbai, a former director-general for the Prime Minister’s Office, to replace him in running the company.

Dankner denied that he lost control of IDB, and told Channel 2 on Friday that he does not intend to resign, and that he will make a better proposal than the “wrong and misguided” one made by bondholders.

“I did not lose control. It is true that there was a proposal this morning, but I don’t know what they wanted to achieve with it,” he said.

IDB issued a statement saying that bondholders’ agreement would lead to “a dramatic ‘haircut’ to the bondholders and an enormous destruction of value.”

It vowed “to act against the peculiar and distorted move” and offer a much better proposal.

A series of investments gone sour in recent years put the company in a precarious position, leaving Dankner to seek debt settlements with the bondholders, investment from Argentinean billionaire Eduardo Elsztain and debt forgiveness from banks.

Jerusalem Post staff contributed to this report.


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