IDB Holding Corp.’s 2020 bonds climbed to a 17-month high before a court deadline next week to submit bids for the company whose estimated asset value was increased.
The yield on Tel Aviv-based IDB’s 1.07 billion shekels ($304 million) of 5.1 percent bonds due in December 2020 slumped 242 basis points, or 2.42 percentage points, to 43.10 percent at the close. in Tel Aviv. The yield has dropped 942 basis points this month, headed for the biggest monthly decline since January.
Debtholders have until Nov. 3 to put in proposals for a debt repayment plan as Israeli businessman Nochi Dankner struggles to repay 2 billion shekels. The controlling shareholder is seeking to retain his grip on the company he spent 15 years building as rivals, including Argentine Eduardo Elsztain and an investor group led by George W. Bush’s brother Neil, seek to wrest control.
“The fate of IDB is approaching and even if Dankner doesn’t remain within the group, there are investors lined to take control of the group’s good companies,” Avihay Hermon, a trader at Israel Discount Bank Ltd. in Tel Aviv, said by phone. “This week’s improved company valuation is also positive ahead of the deadline for the submission of bids.”
The average net asset value of IDB’s unit, IDB Development Corp., was raised to as much as 1.1 billion shekels from 944 million shekels, according to an updated valuation report filed by a court-appointed official. The holding company indirectly controls Israel’s biggest supermarket chain, Shufersal Ltd., and largest mobile operator, Cellcom Israel Ltd.
Dankner turned a family business that made its fortune in table salt and real estate into a sprawling holding company. The combination of unprofitable investments and regulations to boost competition, cut IDB’s market value to 302 million shekels from 5.06 billion shekels at the end of 2010, according to data compiled by Bloomberg.