TEL AVIV, July 7 (Reuters) - Indebted Israeli conglomerate IDB Holding presented to a Tel Aviv court a new proposal for a debt restructuring after Argentinian businessman Eduardo Elsztain backed out of a planned investment of $75 million.
Elsztain’s investment had been crucial to a previous debt restructuring that IDB, which controls some of Israel’s leading companies, had presented to its bondholders.
“The company is holding talks with other investors,” IDB said in a statement to the Tel Aviv Stock Exchange on Sunday.
IDB Holding owes 2 billion shekels ($549 million) while its unit IDB Development owes 5.8 billion shekels. Bondholders have proposed a debt restructuring that would oust IDB Holding Chairman Nochi Dankner and give them full control of a combined company.
Under the new restructuring proposal, whose aim is to enable Dankner to maintain control of IDB Holding, 841.5 million shekels would be injected into the company while IDB Holding debt holders would receive 54 percent of the shares in IDB Development.
IDB Holding debt holders would also receive 175 million shekels from the company’s cash reserves and the bonds would be erased from trading.
Shares in IDB Development would then be listed for trade.
“Debt holders in IDB Holding are expected to benefit from the potential of an increase in the inherent value of the company’s assets, which are among the leaders in the economy,” IDB said in a statement.
This is preferable to the alternative of selling assets as part of a liquidation of the company or under pressure, it said.
IDB did not say from where the money for the restructuring would come. The Globes financial news website said Dankner has held initial talks with U.S. private equity funds KKR & Co and Prudence Holdings regarding a $400 million loan.
IDB controls Cellcom, Israel’s leading mobile phone operator, supermarket chain Super-Sol and Clal Insurance and its subsidiary Koor Industries owns a 2.4 percent stake in Credit Suisse.
Many of the companies have been hard hit by a combination of slowing economic growth and increased competition.
IDB’s bond prices were down as much as 2.9 percent.