In the financial media, there is a near consensus that Nochi Dankner is the most moral tycoon of them all, if for no other reason than "has not yet imposed a haircut" on bondholders. This is in contrast to Yitzhak Tshuva,
Lev Leviev, and Ilan Ben-Dov, for example, who have not repaid all their debts. Even when Dankner's top executives and personal advisers advise him to go the haircut route - because they understand that there is no alternative - he resists and marches to his own drummer and continues to fight, according to the media. The public's knight in shining armor, the good Israeli, he refuses to announce a default, and claims that he will repay all his debts.
Little of this is true. First, Dankner cannot repay all his debts, and today that is clear to everyone. Second, Dankner has already imposed haircuts - it's just that the public doesn't associate them with him. Dankner treated the daily, Maariv - in which he invested hundreds of millions a year and a half ago, a large part of which was public money - as if it were a rolled-up newspaper to be tossed over the fence. In the same package were his dedicated workers, his long-standing customers and Maariv's suppliers, all of whom now have to turn to the courts in order to get the money they are owed.
Mother Maariv
Maariv is the mother of all haircuts, and it is bigger and more disturbing than Tshuva's Delek Real Estate, even though the sums are smaller. And what about gambling more than a billion dollars in Las Vegas to develop a casino. There's also a giant haircut there, part of it to foreign bankers and part to Israeli pensioners, and it's measured in the hundreds of millions of dollars.
Dankner also destroyed an enormous amount of the money that the public invested in the IDB group, whose stock market value fell at frightening rates over the past year. So why do they say that Dankner did not impose a haircut? They even say that Dankner controls IDB when it is in fact at the mercy of its creditors.
Last week, so it was reported on Channel 2, a distinguished delegation visited the group's flagship companies. It included Dankner and Eduardo Elsztain, who invested $25 million with Dankner (with an option for up to $100 million ) after Rabbi Yoshiahu Pinto promised him that he would double and even triple his investment.
The group visited one of Super-Sol's branches as well as Makhteshim Agan and Cellcom Israel. Elsztain even examined real estate and building projects.
The Maariv building, which is only a few hundred meters away from the IDB headquarters, was not visited by the delegation, possibly because of the cessation of cleaning services at the newspaper and the shortage of soap in the washrooms. Nevertheless Dankner told a Channel 2 reporter that he "is doing everything in order [to ensure] that the workers will receive their rights."
"The situation in IDB is challenging," Dankner added, "and there are many goals, but we, in my opinion, are overcoming them and doing so successfully." Thus, Dankner and his public relations people chalked up another week of distorting reality.
IDB's situation Is not challenging; it is terminal. In fact, IDB no longer belongs to him, nor to the new investor from Argentina, but rather to his creditors who were recently joined by York Capital Management, directed by Jeremy Blank.
Blank is also a warm Jew who "made aliyah," but it is not at all clear with which rabbi he consulted, if any, before he decided to acquire IDB Development bonds for $100 million.
As opposed to Elsztain, who acquired Ganden shares that are apparently worth zero, Blank conducted one of the more interesting transactions done here in the past several years.
Blank's advantage
Blank has an almost unlimited amount of two things that Dankner no longer has (besides the soap in the Maariv washrooms ) - and those are time and money. That gives Blank a powerful advantage in his fight for control of IDB.
The jump in the price of IDB Development bonds in the days after TheMarker revealed Blank's investment demonstrates the failures of Israel's institutional investors, who are incapable of taking audacious and logical steps, and instead buy overpriced issuances and sell when the prices have fallen.
So who will profit more - Elsztain or Blank? This could have been an easy question if everything here were based on the laws of economics.
It is clear that Blank should profit more than Elsztain. In fact, the law is that Blank (who is a creditor ) should first receive what he is owed (no less than $200 million for the $100 million that he invested ), and only after that Elsztain (who is an owner ) should begin to get paid. But it is not clear what exactly are the agreements with Elsztain.
Does he, for example, own a failing airline company and large personal debts that IDB could buy from him at a high price, with the approval of Israeli institutional investors?
Blank is fortunate that he resides here so that he can make sure that this does not happen again.
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