After the company spent a few years on death row, the Tel Aviv District Court this week appointed Adv. Aviad Visoly as temporary receiver for Elran Investments. The company is controlled by two households belonging to the Dankner clan: the family of Shmuel Dankner and his son Dori (through Shamdar Holdings) and brothers Dan, Gad, and Alon Dankner (through Dankner Holdings). Dori and Gad Dankner, Nochi Dankner's nephews, managed Elran.
The court granted Visoly authority "to take control and take into his possession all the assets encumbered in favor of the company's bond trustee (series C), and to take whatever action he sees fit." At the same time, Judge Abigail Cohen said that Adv. Visoly was not authorized at this point to sell all or part of the encumbered assets. These include a single fixed senior lien on 9.63% of the shares of Gilat DBS and 5.83% of the shares of the failing subsidiary Elran Real Estate.
Elran Investments has seen glory days in the past under Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), before being acquired by the Dankners early in the first decade of the 21st century, when it was considered financially stable. After the acquisition, however, the buyers' appetite quickly grew, and they pointed the company in the direction of exotic and ambition investments, such as vacation sites in Thailand and Spain, satellite broadcasting networks, drugstores in Romania, an amusement part in Eilat, etc.
Within a short time, it turned out that almost all of Elran's investments had failed. It sank into a severe crisis a few years ago, did not repay its debt on time, and concluded a NIS 150 million debt arrangement in 2010, in which its bondholders lost 50% of their money. The company's shares were delisted in 2012, and it is now listed on the Tel Aviv Stock Exchange (TASE) through its series C bonds issued under the debt arrangement. Trade in these bonds has been permanently halted. There are NIS 38 million of these bonds, which have a junk yield of 90%.
Elran's first quarter financial reports carry a going concern warning. Its equity deficit is NIS 88 million, and its cumulative loss on its balance sheet is NIS 180 million.
A harsh indictment was filed against former Bank Hapoalim (TASE: POLI) chairman Dan Dankner in 2012, exposing how the bank had aided the Dankner family in acquiring most of the bond obligations of Elran Investments, a Dankner family controlled company, and in dictating an aggressive debt arrangement that included a 50% write-down of the bonds, without any substantial capital injection into the company, which the Dankner family still controls.
Last May, a few weeks after the Dan Dankner was sentenced to three years in prison in the Holyland case and had an attachment order imposed on his assets, he had to pay, together with his brother Gad, NIS 2 million to Mizrahi Tefahot Bank (TASE:MZTF) for personal guarantees he gave for Elran Investments' estimated NIS 7 million debt. Shmuel and Dori Dankner paid a similar amount. In its first quarter financial reports, Elran Investments reported a NIS 21.5 million bank debt.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2014
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