Dankner undeterred after Leumi nixes debt deal

Ganden Holdings tycoon optimistic that debt settlement to be reached with Bank Leumi.

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April 22, 2013 00:27
2 minute read.
Nochi Dankner

Nochi Dankner 311. (photo credit: Courtesy)

Ganden Holdings Nochi Dankner said Saturday he is optimistic that a debt settlement can be reached with Bank Leumi despite the bank’s Friday decision not to forgive NIS 150 million of the holding company’s debt following a public outcry over the deal.

“We are convinced that with the banks, too, we will reach a fair and appropriate outline – one that shall be agreed upon,” he wrote in a letter to employees of IDB Holdings, a conglomerate that is a subsidiary of Ganden.

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Ganden must reach a debt deal with Leumi and Mizrahi Tefahot Bank, Ganden’s second biggest creditor, in order to receive a $75m. from billionaire Eduardo Elsztain. In February, Elsztain agreed to invest in the company on the condition that Dankner reach debt settlements with both its bondholders, which he did in March, and the banks.

In his letter, Dankner promised that the deal with Elsztain remained “valid and in effect” despite the latest obstacle to the debt-ridden company.

On Friday, Finance Minister Yair Lapid announced that he and Bank of Israel Gov. Stanley Fischer had agreed to establish a committee to oversee debt issues in the economy and make recommendations to their respective institutions. The committee’s makeup will be decided later in the week.

Bank Leumi said it would suspend a debt arrangement with Ganden while the deal is reviewed by regulators.

“In light of the statement by the supervisor of banks that it is examining the matter, the bank has decided to suspend implementation of the debt arrangement until the review is completed, and will act according to the results,” Leumi said in an emailed statement.

The regulator acted in response to media earlier today that Leumi would forgive NIS 150m. of Ganden’s debt and that other banks would forgive additional amounts. The Knesset Finance Committee announced that it will hold a meeting on Tuesday to discuss “debt arrangements made by banks with tycoons.”

“The matter is being examined by the supervisor of banks,” the Bank of Israel said in a text message sent to journalists. “The guiding principle behind the review is to make sure that the bank operated properly, according to proper procedure, when the credit was given, during its management, and if necessary, during the making of the debt arrangement.”

Opposition leader Shelly Yacimovich (Labor) and Meretz chairwoman Zehava Gal-On expressed satisfaction at Bank Leumi’s decision. Yacomovich said the deal cancellation is “a great victory of the Israeli public.”

“It turns out the public is not apathetic, not asleep, is intelligent and understands when injustice and irrationality cry out of a debt arrangement,” Yacimovich said.

“This is an important move that shows tycoons that our eyes are opened and we will not accept dubious deals that are hatched covertly in the upper class club,” Gal-On said.

Bloomberg and Jerusalem Post staff contributed to this report.


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