The memorandum of understanding between IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, and its Series 2 bondholders was submitted to the Tel Aviv District Court on Thursday evening, after the parties reached agreement on a NIS 35 million payment. IDB was due to make the payment on September 5, but the representatives of its other bondholders objected, and the money was deposited with a trustee.
Under the agreement between the parties, IDB will hold a rights issue to raise NIS 35 million by November 15. If the issue fails, IDB's parent company, Ganden Holdings Ltd., will transfer the amount to be paid to the Series 2 bondholders.
Dankner's next challenge comes in December, when IDB has to make a NIS 64 million payment to its Series D bondholders, and a NIS 3 million interest payment to the banks. The company had NIS 221 million in cash at the end of June, enough for its debt payments through June 2013.
To meet IDB's debt payments, one of Dankner's moves was the sale of 10% of Ganden to Eduardo Elsztain for $25 million. Elsztain also received an option to invest an additional $75 million in Ganden, which would give him a 30.8% stake in the company. Part of the proceeds of the planned sale will go to IDB to meet its payment on the Series 2 bond.
IDB's debt is NIS 2 billion, including NIS 1.6 billion to its bondholders, and the company has a shareholders' equity deficit of NIS 1.6 billion. The company's auditors appended a going concern qualification to its financial report for the second quarter. The company's condition is reflected in the yields on its bonds, which reach 220%, reflecting investors' lack of confidence in the company's ability to repay its debt.
Published by Globes [online], Israel business news - www.globes-online.com - on October 9, 2012
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