IDB Holding 2020 Yield, Shares Drop as Debtholders Seek Control

IDB Holding Corp.’s 2020 bonds rose, pushing the yield down the most in almost six months, after bondholders joined forces to take control of the debt-strapped Tel Aviv company from Chairman Nochi Dankner.

The yield on IDB’s 1.07 billion shekels ($289 million) of 5.1 percent bonds plunged 767 basis points, or 7.67 percentage points, the biggest decline since Dec. 9, to 61.03 percent, at the close in Tel Aviv. The shares dropped 4.7 percent to 8.01 shekels, the lowest on record.

Bondholder representatives of IDB Holding and the company’s IDB Development Corp., which include York Capital Management LP, on May 24 signed a proposal to convert debt into shares. The accord needs Israeli court approval. Both companies will protest the bondholders’ plan and intend to present holders a “much better offer,” according to an e-mailed statement on May 24. IDB Development owes holders and banks a total of 6 billion shekels, according to a company statement.

“The company hasn’t succeeded in securing substantial outside investment and thus this accord may offer a solution for debt holders,” Avihay Hermon, a trader at Tel Aviv-based Israel Discount Bank Ltd., said by phone. “The holders’ plan though still needs court approval and the banks that are owed debt are also likely to oppose the plan.”

Flawed Proposal

Meanwhile IDB’s Dankner told Israel’s Channel 2 on May 24 that he won’t resign and called the bondholders’ plan a ’flawed’ proposal. Dankner has spent the past 15 years building a family business that made its fortune in table salt and real estate and includes Israel’s biggest supermarket chain, Shufersal Ltd., and the largest mobile operator, Cellcom Israel Ltd.

IDB Development, which owes 900 million shekels to Bank Hapoalim Ltd., the country’s largest bank by assets, has to make $83 million in repayments to France’s BNP Paribas S.A. in July 2013 and in 2014.

IDB Holding, which needs to meet payments on about 2.06 billion shekels in debt, has been embroiled in debt-settlement talks with bondholders. The holding company has been seeking further investment from Argentine businessman Eduardo Elsztain.

IDB Development said May 24 it received an offer from a foreign fund for half of its stake in Clal Insurance Enterprises Holdings Ltd.

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