Nochi Dankner did not read the map correctly. For over a year, during which the debt settlement saga at IDB Holding Corp. Ltd. (TASE:IDBH) played out, he was convinced that his struggle was like that of a gladiator, a kind of modern, courageous Spartacus, who woke up each morning to appear in the arena and fight his opponents - the creditors, shareholders, and columnists - for the company. Although the public also saw Dankner as a fighter, the fight was also seen as something fundamentally different and without any heroics: a fight for his personal survival at the top of the IDB pyramid.
In early September 2012, with the publication of the first going concern warning in IDB Holding's financial reports, "Globes" called the event "a dividing line between the way the public previously saw Dankner, and the way it sees him now -between the golden boy of the Israeli economy, and just another tycoon struggling to repay his debts."
That was a time when, despite IDB's deteriorating situation, the words "debt settlement" were never mentioned in the company's offices, and the word "haircut" was never spoken. At the time, "Globes" said that a necessary condition for IDB's recovery under Dankner in the coming year would be an improvement in the financial markets, which would affect the value of IDB's main businesses.
The markets gave Dankner a strong tail wind, which greatly improved the valuations of IDB's holdings in key subsidiaries - Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Shufersal Ltd. (TASE:SAE), Property and Building Ltd. (TASE: PTBL), Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ), and of course, in Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN), which was sold this week for the fantastic sum of $1 billion.
But the key question posited back then was whether Dankner was the right man to head IDB in such a challenging and difficult period. Could the man for whom everything until then apparently came easily, change his spots and get his hands dirty, take the long walk to creditors' meetings, and confront furious bondholders? Did he have the strength of character to make mass layoffs of employees and sever ties with executives who were also friends? Most of all, we stressed, Dankner had to understand that IDB could not continue to be managed as a one-man show. The need for an infusion of cash into the company required not only the recovery and sale of some key holdings, but most of all bringing in a partner with much deeper pockets than his into the controlling core of IDB.
Too little, too late
In the test of results, Dankner provided too little, and most of all, too late. He was able to assemble a group of investors to inject capital into IDB, but after many months of foot dragging and the failure of his partnership with Eduardo Elsztain (who became his bitter rival, and whose joint bid with Motti Ben-Moshe for the acquisition of IDB won a crushing majority of IDB creditors' votes on Monday).
Dankner worked hard, day and night, to fund a solution for IDB's financial crisis, but he barely touched the company's inflated management, and he did not hire a manager of stature who would be accepted by the creditors as the man to lead the company out of the mire.
Most of all, Dankner did not understand that his continuation at IDB's helm was working against him; that his hubris and aggression, which may have been appreciated when things were going well, worked against him during his fall; and that the many failures attributed to him in recent years - headed by the acquisition of shares in Credit Suisse, the investment in Hebrew daily "Ma'ariv", the Las Vegas Plaza project, and the parties at interest deal in Israir Airlines and Tourism Ltd. - erased his previous successes from the public's memory. The name Dankner became a burden on IDB, and he had to move aside.
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2013
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