Bondholders of IDB Holding Corp. voted in favor of an investor group led by Eduardo Elsztain taking control of the debt-strapped company in a move that could see controlling shareholder Nochi Dankner ousted.
“Transfer of control in IDB are premature because court proceedings aren’t finished yet,” Dankner, who is also IDB’s chairman, said in an e-mailed statement late yesterday. “The last word has not yet been said and the final result will be different.”
More than 75 percent of voters are in favor of Argentine investor Elsztain’s group taking over IDB Holding, according to statements by trustees filed to the Tel Aviv bourse today. The court will hold a final hearing Dec. 15 to decide how to settle more than 2 billion shekels ($572 million) of IDB debt.
Elsztain and Extra Holding’s bid includes a cash injection of 876 million shekels and another 650 million shekels that were deposited into an account by Extra. A competing bid led by Dankner and investor Alexander Granovsky was for as much as 1.82 billion shekels, including as much as 818 million shekels paid to IDB creditors and an infusion of as much as 700 million shekels into unit IDB Development Corp.
The yield on Tel Aviv-based IDB’s 1.07 billion shekels of 5.1 percent bonds due in December 2020 rose 134 basis points, or 1.34 percentage points, to 32.44 percent at the close in Tel Aviv. The holding company’s shares dropped 18 percent, the most on record, to 4.691 shekels.
Dankner, from an Israeli family that made its fortune in table salt and real estate, led IDB in the past decade as it accumulated holdings from telecommunications to cement. The combination of unprofitable investments and regulations to boost competition prompted him to seek a debt restructuring agreement with bondholders.
Ganden Holdings Ltd., which is controlled by Dankner, sits atop a pyramid of companies that is among the corporate structures regulators are seeking to simplify. It owns the largest stake in the holding company, which in turn holds 86.8 percent of IDB Development, according to data compiled by Bloomberg. At the next level is Discount Investment Corp., which owns a combined 37 percent stake in Given Imaging Ltd., according to data compiled by Bloomberg. Covidien Plc yesterday said it will acquire Given for about $860 million in cash.