IDB Chairman Nochi Dankner has two months to sell half of
IDB Development's stake in Clal Insurance, the Tel Aviv District Court ruled
Sunday. If he fails, a creditors meeting will be held to approve a takeover of
the debt-strapped company.
Judge Eitan Orenstin said at the start of the court session
that he was under the impression that the parties were afraid to engage in a
dialogue "for fear t
hat it would be interpreted as an admission by the
company that it is in trouble."
He said the NIS 800 million (about $221 million) the company
owes creditors should be deposited in a trust until the end of August by
observer Hagai Olman, an attorney who would also be appointed an outside
observer for IDB Holding.
According to Judge Orenstin, "Over the weekend
promissory notes were submitted on behalf of Dankner and (Argentinean
businessman Eduardo) Elsztain. These promissory notes are not enough to change
the picture. They are not an outline the court can weigh properly.
"The court calls on the parties once again to reach a
wide agreement. The parties are expected to demonstrate maturity and
responsibility while bearing in mind the fate of public funds. They must work
for an agreement, ignoring past differences.
"IDB Development's solvency must be set not just in
asset value but also in its inability to meet its commitments until mid 2014.
If an infusion is not guaranteed through sale of assets, IDB will fail to meet
its commitments.
"IDF must sell half of its stake in Clal Insurance. I
have decided to allow IDF to utilize its efforts to sell assets, headed by Clal
Insurance, to the fullest. I give you till August 22 to complete the sale,
meaning two months," the judge said.
Last week, Dankner made a new debt restructuring offer in an
attempt to appease bondholders seeking to oust him.
IDB said that under the latest debt restructuring proposal,
Dankner and Argentinean businessman Eduardo Elsztain and other controlling
shareholders would inject NIS 375 million (about $102 million) into the company
immediately, which would go towards paying bondholders, and the company will
pay bondholders another NIS 165 million ($45 million) from cash on hand plus
another NIS 100 million ($27 million) in the next four years.
In addition IDB said if a deal is reached with bondholders,
Elsztain would invest another $75 million, or NIS 280 million, in IDB Holding.
Under the plan, bondholders would still take a reduction in
debt but receive 10% stakes in IDB Holding and its IDB Development unit and
they would be issued a new bond series of NIS 700 million ($190 million).
The IDB group, which has assets of $30 billion, controls
Cellcom, Israel's leading mobile phone operator, supermarket chain Shufersal
and Clal Insurance and its subsidiary Koor Industries owns a 2.4% stake in
Credit Suisse.
Many of the companies IDB owns have been hard hit by a
combination of slowing economic growth and increased competition.
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