IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, announced an agreement this morning for the sale of 32% of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) within 45 days at a company valuation of NIS 4.5 billion. Clal Insurance currently has a market cap of NIS 3.52 billion, so that the price tag incorporates premium of 30%.
IDB Development, which holds 54.97% of Clal Insurance, will receive NIS 1.472 billion for the shares, if the deal is completed. Tel Aviv District Court Judge Eitan Orenstin gave Dankner a deadline for selling Clal Insurance that expires tomorrow.
The buyer, JT Capital Management, is a company incorporated in Hong Kong and entirely held by Li Haifeng, a Hong Kong businessman. Within 45 days, JT Capital is to produce the names of the other members of the buying consortium (up to three other corporations) that will join it in the deal, and also the names of the entities that, directly or indirectly, will provide financing.
The parties gave each other a call and put option on IDB's remaining 22.97% stake in Clal Insurance. "Therefore," states IDB Development, "IDB Development expects an additional cash flow of more than NIS 1 billion from the exercise of the put option."
Representatives of JT Capital have already met Supervisor of Capital Markets, Insurance and Savings Prof. Oded Sarig, who is due to approve the deal. This morning, Sarig appointed Moshe Tery as trustee of Clal Insurance in view of the threats by IDB Holding's bondholders to take control of the company. The sale of the controlling interest in Clal Insurance requires Sarig's approval, a difficult and uncertain process. With the appointment of a trustee for IDB's shares in Clal Insurance, it seems that negotiations for the sale of the shares is no longer in IDB's hands.
JT Capital is to produce documents stating that the buyer consortium has an aggregate net asset value (NAV) of $700 million (each member of consortium must show an NAV proportionate to its share in it). The amount is based on the $400 million price for the shares and $300 million for the put option.
JT Capital has deposited $20 million in an escrow account with Meitar Liquornik Geva Leshem Tal Law Offices. A break-up fee of $7.7 million will be transferred to the trustee when the court approves the deal.
IDB said, "If the buyer does not meet the financial wherewithal condition by the deadline, this amount will be foreclosed and transferred to IDB Development. If the buyer meets the financial wherewithal condition by the deadline, the amount will continue to be held by the trustee for the purposes of the agreement."
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2013
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