(photo credit: Marc Israel Sellem)
Labor chairwoman Shelly Yacimovich on Tuesday decried a deal struck between
Nochi Dankner, the majority stakeholder in the IDB holding company, and the
group’s bondholders, saying it was unacceptable that the man who played fast and
loose with Israeli investments should maintain control of the
“Following the last two years in which Nochi Dankner took pride
in IDB not giving a haircut to its investors, he is now joining the dubious club
of controlling shareholders shaving the public’s pensions,” she said.
Monday night agreement specified that the company would receive a NIS 500
million cash injection from its owners– NIS 275m. of which would be delivered
upon signing the agreement, followed by five annual installments of NIS 45m. set
to start two years down the road. The bondholders, on the other hand, would
receive NIS 405m. in cash and a 15 percent share in the company, as well as
several new bonds.
What that meant for anyone holding IDB bonds,
including pension funds that bought the company’s debt, was they would
ultimately lose a portion of the principal amount they lent Dankner’s company, a
term known in finance as a haircut.
“Behind the complex, technical
outline of the IDB arrangement hides a simple truth: We, the saving public, have
forfeited to Dankner some half of his debt, which amounts to several billion
shekels, and meanwhile he kept control of the company for himself as though
nothing happened,” she said.
Even worse, she continued, institutions were
bound to keep investing “our pensions” in Dankner’s companies “while he laughs
all the way to the next haircut.”
Yacimovich, who is slated to lead the
opposition in the new Knesset, promised to fight for policies that would impede
the abilities of those who enact haircuts affecting their debt-holders to raise
credit in the future. She also said institutional investors who manage the
public’s savings should be held accountable.