Two and a half months after the court’s decision on the liquidation of IDB, yesterday (Sunday) the holders of the Company’s Series Tu bonds were fully repaid of the debt towards them thanks to the sale of the assets pledged in their favor.
IDB’s 14 series of bonds is also expected to be fully repaid after the completion of the sale of the assets pledged in its favor, while the holders of the third series, the unsecured T-bond, will receive an “haircut” of an estimated NIS 385 million (46 In total, the realization of IDB’s assets is expected to yield to all holders consideration in the amount of approximately NIS 1.5 billion.
On September 25, 2020, the Vice President of the Tel Aviv District Court, Justice Hagai Brenner, decided on the liquidation of IDB, which was controlled by Eduardo Elstein, due to debts of about NIS 2 billion to its bondholders, a deficit of about NIS 1 billion in equity and lack of cash in the coffers. At the time of the liquidation, IDB had three different series of bonds – two of them (14 and 15) guaranteed by mortgages on assets, while the third (9) had no collateral at all. .
Series XIV was pledged as collateral for approximately 70% of the shares of Discount Investments (DSK), with a debt to it of approximately NIS 890 million. The debt for the Tu series amounted to approximately NIS 165 million and was secured by a lien on approximately 5% of the shares of Clal Insurance Company.
The largest debt, amounting to NIS 910 million, belonged to the unsecured Series T. However, after deducting bonds held by IDB itself, this is a lower debt of about NIS 835 million in Paris terms.
Yesterday, attorneys Adi Figel and David Peretz, receivers of Clal Insurance shares pledged to bondholders, reported the sale of the entire shares for NIS 168 million. The sale amount will enable the repayment of the entire debt (principal and accrued interest) to the holders of Tu Bonds as well as the financing of the conference expenses.
In a statement to the court, the receivers explained that Clal Insurance shares were sold at a price of NIS 49.72, which reflects an increase of 64% since the receivers were appointed to their position by the court. This increase means a significant addition of NIS 65.5 million in the total consideration that Tu bondholders will receive from the encumbered shares.
Following the sale of the shares, the Tu series became the first IDB bond series to be repaid in full, since the court decided on the liquidation. Series XIV is also planned to be repaid in full in the near future, after the Competition Authority and the Ministry of Communications approve the deal to sell the controlling shares in DSK to Mega Or and its partners.
Last November, Judge Brenner decided to approve the sale of about 82% of DSKS ‘shares to the profitable real estate company Mega Or, which is controlled by Tzachi Nachmias, and its partners for a total amount of NIS 1.11 billion. About 70% of the DSK shares pledged in favor of holders of 14 bonds will be sold for NIS 950 million, while the remaining 12% will be sold for NIS 164.5 million.
The transaction was led by the receivers of the pledged shares, Adv. Raanan Clear and Alon Binyamini, and with them IDB trustee, Adv. Ofir Naor, who is in charge of the rest of the company’s assets. Completion of the transaction in the coming weeks will enable the repayment of the full debt to the holders of 14 bonds, the payment of the conference expenses, as well as consideration to the holders of 9 bonds in the amount of NIS 223 million.
Holders will receive consideration from the sale of Israir
At the same time, Judge Brenner recently approved another request by Adv. Naor to sell the Israir airline to Rami Levy and the BGI company under his control, at a value of NIS 162 million to Israir. According to the outline of the transaction, B.J. Y.I and Levy 75% of Israir’s shares for NIS 121.5 million, with the balance of the shares (25%) being transferred to T-bond holders.
At the same time, BGI will receive an option to purchase the balance of Israir’s shares in exchange for 25% of its shares, with T bondholders receiving an option to sell the shares to BJI for NIS 40.5 million. Two properties These are expected to bring about a refund of about NIS 385 million to T bondholders.
In addition, T-bond holders will receive additional consideration from the sale of the remaining IDB assets: the holdings in 25.8% of the shares of the real estate company IDBG, in 16% of the shares in Modiin Energi, in 15% of the start-up company Colu , As well as a collection of works of art to be sold at auction. IDBG owns the Tivoli Commerce and Offices Project in the city of Las Vegas, USA. During the first half of 2020, IDB sought to sell its holding in IDBG to Properties and Building (a subsidiary of DKSH), which holds the remaining shares, for an amount of approx. $ 27.8 million, but it met with opposition from minority shareholders of properties and building – and the deal did not materialize.
Properties and Building and IDB are now expected to put the IDBG shares or the project itself up for sale. According to the optimistic scenario, the sale to IDB will yield the consideration that was supposed to be received in the previous transaction – that is, about NIS 90 million at the current exchange rate. However, a more cautious approach will at the present stage assume a lower return, of only NIS 50-70 million.
In total, including the realization of the balance of the pledged holdings in their favor, and after payment of the trustee’s fee (which may reach NIS 10 million), a repayment of NIS 450 million can be cautiously assumed to IDB T bondholders for a debt of NIS 835 million, that is, a “haircut” of about 46% for the bondholders, before debt claims that are expected to be filed against Irsa, which is controlled by Elstein, and against IDB officers. For the purpose of managing these claims, the trustees are expected to leave in their hands an amount of NIS 10-15 million from the liquidation fund.
New threat to bondholders
Meanwhile, a new threat to IDB’s T bondholders was discovered this week, following an application by the accounting firm Somekh Chaikin to the court to continue conducting legal proceedings against IDB. This is a procedure initiated by Somekh Chaikin against E.I. DB, after being attached as one of the defendants in the application for approval of a derivative claim filed against DSK for the distribution of a NIS 1.25 billion dividend made in 2010-2011.
The request means that Somekh Chaikin will be another IDB creditor, in a way that will increase the total oblivion to more than NIS 2 billion and prevent IDB from distributing funds to T-bond holders before the end of the lawsuit. T bonds to resist.