IDB Development Corporation Ltd. (TASE:IDBD), controlled and led by Eduardo Elsztain, has asked Supervisor of Insurance, Capital Market and Savings Dorit Salinger for more time in which to sell its shares in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), so that it can prepare an alternative plan according to one of the alternatives proposed by Salinger.
As of now, Salinger has ordered IDB Development to sell at least 5% of the shares in Clal Insurance by May 7, and at least 5% more every three months. IDB Development holds 55% of Clal Insurance.
Salinger said she would manage the sale process ordered by her through Moshe Tery, the trustee on her behalf for the shares, under her authority, and in accordance with the procedure outlined by her a number of times. IDB's letter to Salinger proposes that she allow a two-year postponement of the commencement of this procedure, while IDB Development undertakes to sell 20% of the shares in Clal Insurance at the end of this period. Alternatively, IDB Development proposed that an alternative procedure be devised under which the voting rights in the Clal Insurance shares owned by IDB Development are not to be exercised.
IDB Development is not alone in its opposition to the sale procedure being forced on it. The bondholders and other shareholders in Clal Insurance also oppose this. This procedure is not a surprise, however; it has been public knowledge since 2013, and was the result of the collapse of IDB Holding Corp. under the group's previous management.
At that time, the Ministry of Finance appointed a trustee for the controlling interest in Clal Insurance held by IDB, and allotted a limited and agreed time for the sale of control to a third party. Since that time, Salinger has granted IDB a one-year extension for the sale.
Headed for a court hearing
In the end, IDB Development did not comply with Salinger's instructions, and did not sign an agreement for the sale of Clal Insurance. An agreement was almost signed with a Chinese company, but the prospective buyer withdrew from the procedure at an advanced stage, as far as is known because it felt that the Ministry of Finance was not eager, or even willing, to approve the sale.
IDB Development made it clear that it might have to sell a few of its shares in Clal Insurance for the sake of its liquidity, but the issue appears destined for a hearing in court, which will have to decide it, after Salinger made it clear that she was determined to go ahead with the procedure she outlined. The matter will go to court on May 4, following the Passover holiday.
As of today, Clal Insurance had a market cap of NIS 2.7 billion, making IDB Development's stake in the company worth NIS 1.47 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 21, 2016
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