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IDB Bondholders Vote on Debt Deal as Talks With Company Fail

IDB Holding Corp. (IDBH) debtholders will be voting on a new payment proposal as talks with controlling shareholder Nochi Dankner failed to produce a solution for the debt-strapped company, a bondholder committee member said.

Debtholders at the company struggling to make payments on about 2 billion shekels ($548 million) met to discuss a settlement plan, which includes full or partial conversion of debt into IDB Development Corp. shares. They have until tomorrow to vote on a framework under a July 7 court deadline. Today’s meeting follows Dankner’s efforts to find investors and sell assets to avoid bondholders’ wresting control.

“We held talks with IDB last night but no concrete conclusions on a debt accord have been reached,” Yoav Armoni, chief executive officer of Gilad Pension Fund, which holds 58 million shekels of the debt, said at today’s meeting in Tel Aviv. “We will continue talks with IDB, while also preparing our own debt proposal and file it to the court.”

A spokeswoman for IDB, who couldn’t be named because of company policy, declined to comment.

A Tel Aviv court on June 9 told Dankner to arrange the sale of a stake in Clal Insurance Enterprises Holdings Ltd. (CLIS) by Aug. 22, otherwise “the company won’t be able to meet its payments” through 2014. The court’s demand came after bondholders of IDB Holding and IDB Development, which owns a 55 percent stake in Clal Insurance, joined hands in May to force a debt-to-equity swap, increasing the possibility that Dankner may lose control of the companies.

The yield on the 1.07 billion shekels of IDB Holding’s bonds due December 2020 jumped 273 basis points, or 2.73 percentage points, the most since May 2, to 65.86 percent at 1:51 p.m. in Tel Aviv. The shares gained for the first time this week, increasing 1.5 percent to 6.75 shekels.

“In addition to this proposal we can expect the joint debt proposal as well as proposals by IDB and the banks to be submitted to the court next week,” said Armoni, who is also a member of the bondholder committee.

To contact the reporter on this story: Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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