IDB Development is cashing up, in an attempt to avoid a forced debt settlement. This morning, the subsidiary of IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, sold its remaining holding (10.6%) in Clal Industries and Investments Ltd. (TASE: CII) to investment house Altshuler Shaham and insurance company Menorah Mivtachim Holdings Ltd. (TASE: MORA). This follows the sale of control in the company to Len Blavatnik in July last year.
The assessment on the market is that IDB carried out the sale at the present time in order to repulse the attempt by the representatives of its bondholders to force a debt settlement on it. It is not inconceivable that this sale will avert a going concern qualification in IDB Development's annual report, due to be released at the end of this month. Such a qualification could be the trigger for a forced debt settlement, as happened in the case of parent company IDB Holding.
The NIS 223 million sale of the shares in Clal Industries was carried out at a price per share of NIS 13.3, 11.3% below yesterday's closing price on the stock market. The deal price values Clal Industries at NIS 2.1 billion, 17.5% less than the valuation at which the sale of control to Blavatnik took place. Because of the high discount at which the shares were sold, Clal Industries' share price fell 3.9% today, on a high turnover of NIS 81 million. The shares were distributed via Rosario Capital.
IDB Development reported that, in the wake of today's sale of Clal Industries shares, it would report a loss of about NIS 10 million for the fourth quarter of 2012, and a profit of some NIS 22 million for the first quarter of 2013. The sale, together with an expected dividend from Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), of which its share will be about NIS 66 million, will boost its cash balance to some NIS 1.1 billion. IDB Development has debt of some NIS 6 billion, of which NIS 4.1 billion is to bondholders, and has to meet debt repayments of NIS 1.35 billion over the coming year. Of this about NIS 500 million is due to be paid to bondholders in June.
IDB's management has recently found itself at loggerheads with the representatives of the IDB Development bondholders, York Capital, Psagot Investment House Ltd., and The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5). The price of today's deal has only poured fuel on the flames.
"When did you last see a controlling shareholder sell at below market price?" a source from among the bondholders commented today. "It's always claimed that the market does not reflect the real value and that the price should change upwards. It looks as though Dankner is busy breaking up the company, and that's something to be done through the court, not alone."
Published by Globes [online], Israel business news - www.globes-online.com - on March 6, 2013
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