Time runs short for Dankner as Elsztain drops support

On Wednesday, IDB Holding bondholders voted by an overwhelming 90 percent for a plan that would oust Dankner.

July 7, 2013 02:21
1 minute read.
Nochi Dankner in court, June 9, 2013.

Nochi Dankner in court 370. (photo credit: Tal Shahar/Yediot/poll)

Ahead of a crucial court date on Sunday, the odds aligned against Nochi Dankner as his plans to maintain control of IDB hit setback after setback.

On Wednesday, IDB Holding bondholders voted by an overwhelming 90 percent for a plan that would oust Dankner.

On Thursday, Argentinean billionaire Eduardo Elsztain, who Dankner had brought in to recapitalize the company, decided he would not exercise his option to invest $75 million in the group.

IDB Holdings and its creditors were due to submit their plans for a debt arrangement to the Tel Aviv District Court by Sunday, a proceeding that could pave the way for a change in control. The legal proceedings began with the claim of the IDB Development bondholders that the company is insolvent, which IDB firmly denies.

Dankner’s strongest argument to bondholders had been that his plan for the debt-ridden conglomerate was the only one bringing new money to the table. Globes reported that Dankner remained determined, and was trying to line up other investors to fill the void.

Elsztain, who already injected $25m. into the company, was named deputy chairman of IDB Development just on Tuesday. According to Globes, he chose to hold back further support due to “prolongation of the negotiations with the bondholders, the difficulties in the negotiations, and the tight timetable for dealing with the matter.”

Ahead of a June court ruling that allowed Dankner a short respite to get his business in order, Elsztain flew to Israel in a public show of support.

“The reason of my trip is only to confirm that we are ready to move forward,” Elsztain said at the time.

IDB Development owes NIS 4 billion to its bondholders and NIS 2b. in total to several big banks.

IDB controls Cellcom, Israel’s leading mobile phone operator, supermarket chain Super-Sol and Clal Insurance, and its subsidiary Koor Industries owns a 2.4 percent stake in Credit Suisse.

TheMarker said Dankner would present a new proposal for a debt arrangement in the next few days and that money from the new investors will be deposited in an escrow account early this week.

Globes and Reuters contributed to this report.

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