IDB Holding Corp. (IDBH)’s shares plunged to a record and bonds slumped after Argentine businessman Eduardo Elsztain decided against further investment in the debt-strapped company.
The shares tumbled 11 percent to 5.83 shekels, the lowest on record, at 11:54 a.m. in Tel Aviv. The yield on IDB’s 1.07 billion shekels of 5.1 percent bonds due in December 2020 increased 379 basis points, or 3.79 percentage point, to 67.53 percent. The benchmark TA-25 Index gained for a second day, increasing 0.3 percent.
Elsztain won’t exercise an additional $75 million investment option that would have had him share ownership of IDB with Chairman Nochi Dankner. The move came after the company’s debtholders last week approved a restructuring plan that would convert debt into shares of unit IDB Development Corp. Tel Aviv-based IDB Holding is struggling to meet payments on about 2 billion shekels ($547 million).
“As Dankner is left without an outside investor it looks like the court may give more support to the bondholders’ restructuring plans,” Avihay Hermon, a trader at Tel Aviv-based Israel Discount Bank Ltd. (DSCT), said today by phone.
The creditors debt plan will be presented to a Tel Aviv court today together with the joint debt proposal signed in May with IDB Development holders. IDB Holding said today it will submit an alternative debt proposal to the court.
The creditors’ proposal would give them control over the company Dankner spent 15 years building. He turned a family business that made its fortune in table salt and real estate into a holding company which includes Israel’s biggest supermarket chain, Shufersal Ltd. (SAE), and the largest mobile operator, Cellcom Israel Ltd. (CEL)
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