TEL AVIV (Reuters) - New York-based hedge fund York Capital Management has been buying up bonds in debt-ridden Israeli conglomerate IDB Development and could lead a hostile takeover of the company, TheMarker financial newspaper reported on Wednesday.
York, which specializes in distressed debt, has spent 400 million shekels ($103 million) buying 800 million shekels worth of IDB Development bonds, which are trading at a 50 percent discount. York is now the biggest holder of IDB’s bonds with about 20 percent of the total, according to the report.
TheMarker said York would prefer IDB’s management tackle the group’s recovery, but the hedge fund could also try to take control with other bondholders via a debt for equity swap.
A takeover of IDB Development, one of Israel’s largest holding companies, would give York control of some of the country’s most lucrative assets, including the leading mobile phone operator and supermarket chain.
The IDB group, with assets of $30 billion, controls mobile phone operator Cellcom (CEL.TA), supermarket chain Super-Sol (SAE.TA) and Clal Insurance (CLIS.TA). Its subsidiary Koor owns a 2.4 percent stake in Credit Suisse CSGN.VX.
York’s representative in Israel, Jeremy Blank, was not available for comment. A spokeswoman for IDB declined to comment. IDB’s bondholders are scheduled to meet on October 25.
IDB has been selling off assets to reduce its hefty debts. It reported a big second-quarter loss that raised concerns it might not be able to pay them.
In Israel, York is known for its 2006 acquisition of Psagot, the country’s largest investment house, which it sold to the Apax Partners fund in 2009 for a large profit.
($1 = 3.87 shekels)
Reporting by Tova Cohen. Editing by Jane Merriman