IDB Development Corp.’s 2018 bonds rallied to a 15-month high after the debt-strapped company reached an accord to sell 32 percent of its insurance unit to Chinese investors for 1.47 billion shekels ($412 million).
The yield on IDB Development’s 1.35 billion shekels of 4.5 percent bonds due June 2018 dropped 171 basis points, or 1.71 percentage point, to 15.25 percent at the close in Tel Aviv. The shares of the unit, Clal Insurance Enterprise Holdings Ltd., rose 1.8 percent and those of parent IDB Holding Corp. jumped 12 percent to 7.008 shekels, the highest since June 27.
IDB Development, which owns 55 percent of Clal, signed an agreement with Hong Kong-based JT Capital Management Ltd. valuing the insurer at 4.6 billion shekels, reflecting a 30 percent premium on the share price at the signing of the deal, the company said in an e-mailed statement today. The agreement comes a day before a court deadline for IDB Holding’s Chairman Nochi Dankner to sell a stake in the company. Last week an unidentified Thai investor pulled out of a bid for the insurer.
“At the last moment IDB succeeded to get a good offer for Clal despite the time pressure dictated by the court,” said Raz Mor, a corporate debt analyst at Tel Aviv-based Meitav DS Investment House Ltd. “The deal still needs the approval of the regulator and is only one option in IDB’s debt restructuring saga.”
IDB Holding has been trying to sell assets as the company struggles to meet payments on about 2 billion shekels.
Meanwhile, IDB Holding received two takeover offers. Argentine businessman Eduardo Elsztain has been in talks with bondholders’ trustees for an investment of 770 million shekels in exchange for a 51 percent stake in IDB Development. Emblaze Ltd., based in Hertzliya Pituach, Israel, and Tel Aviv-based Netz Group Ltd. said Aug. 15 they are offering 826 million shekels for an 80 percent stake in IDB Holding. A Tel Aviv court is scheduled to hold a hearing on Aug. 25 to discuss the offers.
The yield on IDB Holding’s 5.1 percent bonds maturing December 2020 rose for the first time since Aug. 14, increasing seven basis points to 49.17 percent.