IDB Development ensures NIS 560m bond issue

Eduardo Elsztain
Eduardo Elsztain

5% interest was set for the bonds, compared with the 6.8% maximum set for the tender.

IDB Development Corporation Ltd. (TASE:IDBD), controlled by Eduardo Elsztain, today reported that it had guaranteed that its issue of a new bond series would amount to NIS 560 million. The company's announcement to the Tel Aviv Stock Exchange (TASE) also said that the demand in the advance tender for financial institutions last Thursday had totaled NIS 1.25 billion.

The NIS 560 million in bonds selected by IDB Development in the tender will bear 5% interest, substantially less than the 6.8% maximum interest rate set for the tender. The public stage of the tender, at which the company will attempt to raise up to NIS 642 million more, will take place this week.

The new Series 14 bonds are repayable in a single payment at the end of 2022 with a duration of 4.8 years. The series will be secured by a senior lien on the shares in Discount Investment Corporation (TASE: DISI) owned by IDB Development.

In a presentation published by IDB Development in advance of the issue, it emphasized that the deed of trust for the Series 14 bonds would be adapted to the solution it had chosen for complying with the Promotion of Competition and Reduction of Concentration Law. In order to avoid the need to obtain approval, IDB Development's management is likely to consider early redemption of NIS 383.5 million in its Series 12 bonds, combined with an expansion of its Series 14 issue.

The presentation published by IDB Development indicates that the company has NIS 551 million in cash, after having paid NIS 569 million in interest and principal to its various creditors since May 25. The relatively long period for the company's new bond series will bolster its liquidity, and is likely to help raise the current BB rating for its existing bonds.

In the projected cash flow report attached to IDB Development's first quarter financial statements, the company noted that it would need NIS 130 million in additional sources in order to complete the cash it required by the end of March 2019. The current issue answers this need.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 23, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Eduardo Elsztain
Eduardo Elsztain
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