Israeli conglomerate IDB agrees to sell insurance stake to meet debt deadline

JERUSALEM Wed Aug 21, 2013 5:59am EDT

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JERUSALEM Aug 21 (Reuters) - Israeli conglomerate IDB Development said it had agreed to sell a third of its insurance unit to Hong Kong's JT Capital Management for 1.472 billion shekels ($413 million) to meet a court deadline for settling its debts.

Li Haifeng's JT Capital will pay 83.1 shekels per share for the 32-percent stake in Clal Insurance, Israel's No. 2 insurer, 30 percent more than Tuesday's closing price.

As part of a debt settlement process, Tel Aviv District Court had given IDB, a unit of IDB Holding Corp, until Aug. 22 to sell at least half of its 55-percent Clal stake.

Clal Insurance shares rose 2.15 percent to 65 shekels by midday on Wednesday while IDB Holding was up 13.8 percent.

The court is due to rule on Sunday on whether IDB Holding Chairman Nochi Dankner can keep control of the group. IDB Development and IDB Holding's bondholders have proposed a debt restructuring that would oust Dankner and give them full control of a combined company.

Separately, Argentine businessman Eduardo Elsztain is in talks with IDB Holding bondholders to invest 770 million shekels in IDB Development in exchange for a 50.5 percent stake. His proposal is less than Dankner offered bondholders last week, in an agreement with mobile technology firm Emblaze, that would see an injection of 826 million in IDB.

Before the court decision on Danker's control of IDB, capital markets and insurance commissioner, Oded Sarig, has ordered the transfer of IDB's Clal Insurance shares to a trustee to ensure the running of Clal is not affected its sale.

However, the court said it will not allow Sarig to appoint a trustee until he explains the decision.

JT Capital had been in touch regarding buying control of Clal but Sarig said it was just in general terms and no details had been discussed. When asked if he would approve the agreement between IDB and JT Capital, Sarig said: "We are checking the deal and checking the details." He will need to grant a special permit for any transfer of control in Clal.

Many of the companies IDB owns have been hit by slowing economic growth and increased competition. IDB Holding owes bondholders 2 billion shekels and IDB Development owes a further 5.8 billion.

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