Dankner gets 2 months to sell Clal
If IDB chairman fails to sell half of IDB Development's stake in Clal Insurance, creditors will convene to approve takeover of debt-strapped company, Tel Aviv District Court rules
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 that it would be interpreted as an admission by the company that it is in trouble."
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.
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 hit by slowing economic growth and increased competition. IDB Holding owes bondholders NIS 2 billion ($550 million) and its unit IDB Development owes a further NIS 5.8 billion ($1.6 billion).
Both sets of bondholders - mainly institutional investors led by US hedge fund York Capital - proposed a debt restructuring last month that would oust IDB Holding Chairman Nochi Dankner and give them full control of a combined company.
Dankner has sought a dismissal of the plan, maintaining that IDB will meet future obligations.
IDB Development, which has been trying to sell assets to pay its debt, has said it received an offer from a foreign fund for the 55% stake it owns in Clal Insurance, one of Israel's biggest insurers, that reflects a valuation for the entire firm of NIS 4.5 billion ($1.24 billion).
Following the hearing, Dankner told reporters the deadline for the Clal sale was "short and challenging" but he would seek to meet it.
IDB said in May the fund was conducting due diligence on the transaction, which should take six weeks.
To shore up IDB's capital, Dankner has brought in Argentinian businessman Elsztain, who pledged to invest $75 million in IDB Holding, in addition to $25 million he already invested. Over the weekend, IDB filed a petition stating that Elsztain signed an agreement to deposit the money for the investment in escrow.
Reuters contributed to this report
