IDB Development Corporation Ltd. (TASE:IDBD), controlled by Eduardo Elsztain, will soon attempt another bond offering, which will probably be guaranteed by a lien on the shares of its subsidiary Discount Investment Corporation (TASE: DISI). This is because IDB has been required to make a prepayment for most Series 11 bonds, raised at the beginning of August. The new offering is expected to cover a NIS 244 million payment and will therefore most likely total NIS 200-250 million.
At the end of last week, IDB's management reported that its board of directors decided to examine the possibility of offering the public a new bond series, which might be guaranteed by a lien on some of its assets. The company also said that the financing round might involve an expansion of an existing bond series, but since the existing series (7, 9 and 10) are currently traded at high yield to maturity rates of 11%-14%, this possibility does not seem feasible at present.
As mentioned, in early August IDB completed a financing round totaling NIS 325 million (in gross terms), in an offering of Series 11 bonds, guaranteed by a commitment to provide investors with a lien on a 19% stake in its subsidiary Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). However, this commitment had been rejected by the Supervisor of Capital Markets, Insurance, and Savings Dorit Salinger, which had led IDB to commit to a prepayment of this series, if approval was not attained.
In parallel, IDB submitted a plea to the High Court of Justice to revoke Salinger's decision to reject this lien, but the court has revoked most of the plea, allowing IDB to impose a lien on only 5% of Clal Insurance for Series 11 bondholders. Due to the rejection of the plea, IDB announced on Thursday that bondholders will receive a NIS 239.5 million return on their principal payment as well as interest, linkage differentials and compensation for the surrendered portion, totaling NIS 4.5 million. Overall, at the end of October IDB will repay 73.7% of the remaining bond principal, reducing it to only NIS 85.5 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 19, 2016
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