Nochi Dankner is a step nearer to losing control of IDB, one
of Israel's biggest conglomerates, after the courts ruled Sunday that the
putative buyers' finances are sound.
IDB can be transferred to buyers Eduardo Elsztain and Moti
Ben-Moshe after Tel Aviv District Court Judge Eitan Orenstein ruled Sunday that
Ben-Moshe's finances were in order.
The decision all but ends a lengthy legal, financial and
public relations battle by Nochi Dankner, with his partner, the Ukrainian
businessman Alexander Granovsky, to retain control of the sprawling holding
company.
Orenstein gave the Dankner-Granovsky group 15 days to file
an appeal.
Elsztain and Ben-Moshe cleared the last hurdle they faced to
gaining control of IDB Holding Corporation, the company that sits at the apex
of the group, on Sunday after Orenstein concluded that an examination he had
ordered of Ben-Moshe's finances found no cause to suspect there was anything
inappropriate.
The Judge said the report, which was prepared by the
Securities Authority and others, showed that "the source of Ben-Moshe's
money is from the current accounts of [his Extra] group and not from any
outside source …. There is no evidence that undermines the foundation of the
arrangement."
Bailing out IDB
IDB's holdings include many of Israel's leading businesses,
such as Super-Sol, it biggest supermarket chain, Cellcom Israel, its biggest
cellphone operators; and Clal Insurance, one of Israel's biggest insurers. But
the companies at the top of the pyramid-structured group are enmeshed in heavy
debt.
The Elsztain-Ben-Moshe proposal offers to bail out IDB with
a cash injection of 650 million shekels into IDB Development Corporation, one
of the group's top holding companies. IDB's creditors would get 300 million
shekel in cash along with 46.7% of IDB Development stock.
Ben-Moshe has said the funds for his share of the bailout
will come from units of his German-based Extra Group, primarily from its energy
and telecoms companies.
Elsztain is chairman and chief executive of IRSA,
Argentina's biggest real estate company. He also chairs Cresud, a major
agriculture producer.
Creditors vote for the buyers
Nearly a month ago, Elsztain and Ben-Moshe won support from
more than 75% of the votes of bondholders and bank creditors to take over the
group, a vote Orenstein needed to approve. Orenstein then ordered the probe
into the source of Ben-Moshe's funds.
Elzstain and Ben-Moshe to make the first payment on the
bailout plan by January 14 and instructed Eyal Gabbai and Hagi Ullman, the
court-appointed administrators of IDB, to oversee the process. All of IDB's
directors were instructed to step down and in their place nine new ones as well
as new CEO will be named.
The team investigating Ben-Moshe's finances, which was
appointed December 17 after lawyers for the Dankner-Granovsky group raised
doubts about them, spent two weeks on the assignment and reported back last
Wednesday. An Israeli national, Ben-Moshe made his fortune in Germany and was
unknown in Israel business circles until he emerged as Elsztain's partner in
the IDB bid.
After Orenstein announced his decision on Sunday, all the
parties involved – the two rival groups and the attorneys representing
creditors -- over a further delay in transferring control of IDB to the
Elsztain-Ben-Moshe group.
Opposing any delay, Raanan Klir, representing
Elsztain-Ben-Moshe said, "We are creating a situation in which IDB is
being managed by its current controlling shareholders who have no interest in
ensuring that any other debt arrangement apart from their own will succeed."
Orenstein took a short break to weigh the issue and
adjourned his court at about 2:00 P.M. where he gave the Dankner-Granovsky
group time to appeal to the Supreme Court. Recognizing that further delays
could do more damage to the financially ailing conglomerate and cost creditors
hundreds of millions of shekels, Orenstein said the Elsztain-Ben-Moshe group
could opt to withdraw their bid with 30 days.
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