IDB Development 2018 Yield Jumps on Clal Pullout: Tel Aviv Mover

IDB Development Corp.’s 2018 bonds plunged the most in more than two months after a Thai investor withdrew an offer to purchase a stake in the debt-strapped company’s insurance unit a week before a court deadline for the sale.

The yield on IDB Development’s 1.35 billion shekels ($378 million) of 4.5 percent bonds due June 2018 soared 178 basis points, the most since June 9 on a closing basis, to 20.85 percent at 1:58 p.m. in Tel Aviv. The shares of the unit, Clal Insurance Enterprise Holdings Ltd. (CLIS) tumbled 5.1 percent, the most since June 24, to 62.30 shekels.

IDB Development’s Chairman Nochi Dankner must find a buyer for as much as 55 percent of the shares the company holds in Clal after a Tel Aviv court set an Aug. 22 deadline for the sale. The unidentified Thai investor pulled out, IDB Development, who’s mired in debt-restructuring talks, said in a statement to the Tel-Aviv bourse today. An unidentified Hong Kong investor is still considering buying a stake in the Israeli insurer, the company said.

“Dankner is fighting to the last moment to retain control of the IDB group,” said Raz Mor, a corporate debt analyst at Tel Aviv-based Meitav DS Investment House Ltd. “It is hard to see how the company will be able to meet the court’s demand on the Clal stake.”

The shares of parent IDB Holding (IDBH) Corp., which has been trying to sell assets as the company struggles to meet payments on about 2 billion shekels, slid 3.9 percent to 5.30 shekels. The yield on IDB Holding’s 5.1 percent bonds maturing December 2020 surged 306 basis points to 58.39 percent.

The company’s bondholders this week voted in favor of a debt restructuring plan which would divvy up IDB Holding’s shares among them, according to a statement today to the bourse. A bondholder vote, expected by Aug. 18 on several debt restructuring plans, could see chairman Dankner ousted.

IDB Holding told a Tel Aviv court last month it’s in initial talks with investors, including Argentine Eduardo Elsztain, for investments in IDB Holding. Koor Industries Ltd. (KOR), a unit of IDB Development, said this week it will advance the sale of its 1.95 percent holding in Credit Suisse Group AG (CSGN), which it values at 2.1 billion shekels net.

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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