Elsztain: I'm sole IDB controlling shareholder

Eduardo Elsztain
Eduardo Elsztain

Eduardo Elsztain's is demanding that the IDB board recognize him as IDB's only controlling shareholder.

After a prolonged period of stagnation at IDB Development Corporation Ltd. (TASE:IDBD), and in view of the rift between its two controlling shareholders, it appears that Eduardo Elsztain is losing patience. Sources close to IDB said that Elsztain plans to ask the board of directors to recognize him as the sole controlling shareholder and decision-maker in the concern, due to the board's limited cooperation and half-hearted support for the measures he wants to push through. The sources further assert that Elsztain is disappointed that the board members have not realized that he is now de facto the sole controlling shareholder in the group, and are putting obstacles in his path.

The current issue on the agenda is the IDB bond trustees' request that Elsztain bring forward his already promised NIS 160 million injection (through an exercise of options), after his representatives and IDB management met with the trustees in the past few days. Elsztain is believed to be aiming at enhancing his domination of the company before he agrees to grant the trustees' request.

As far as is known, Elsztain is on a collision course with some of the directors. At the beginning of the month, external director Meir Shani sent a letter to the board members asking Elsztain "to respect the external board members and their judgment; they have only the company's good at heart," and warning that "if a meeting takes place at which the board members are threatened, I will not accept this lightly."

NIS 100 million in addition to the promised injection

Elsztain and Moti Ben-Moshe acquired control of IDB Development last year as part of a debt arrangement, in which their investment to date totals NIS 1.8 billion. In early 2015, the company, at the demand of Elsztain, led an issue of rights for raising NIS 806 million, but the issue raised only a little of half of that sum, after Ben-Moshe declined to take part in it. As a result, Elsztain's holdings grew to 61.5%, while Ben-Moshe's holdings were diluted to only 16.2%. The value of the pair's aggregate holdings currently stands at only NIS 600 million, meaning that they have lost almost NIS 1.2 billion on paper.

Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Eduardo Elsztain
Eduardo Elsztain
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