Israeli tycoon Nochi Dankner is on the verge of losing control of the IDB Group, some 10 years after taking the company over and turning it into the largest conglomerate in Israel.
IDB, which through its various subsidiaries controls dozens of telecommunications, real estate, technology, retail and financial service companies, has been navigating murky financial waters for the past two years. The company's debts to bondholders amount to 1.8 billion shekels ($510 million) and its bank debts amount to NIS 206 million ($58.9 million).
Dankner has attempted to raise the funds needed to stabilize the company and maintain his control of it several times, but his proposals were consistently rejected by the bondholders, who eventually turned to the Tel Aviv District Court in an attempt to force him out. After several months, the court ordered the parties to pursue arbitration.
In a meeting on Sunday in Tel Aviv, IDB's creditors were able to secure 75 percent of the bondholders' votes in favor of the bailout proposal presented by Argentine Jewish businessman Eduardo Elsztain and Israeli businessman Moti Ben Moshe, who seek to assume control of the company.
IDB's creditors were able to secure the necessary majority to remove Dankner after two voting rounds, with the first round garnering only 71% of the votes. Since a special, 75% majority was needed to force Dankner out, a second vote was held immediately, and this time the creditors prevailed.
The vote, and the pursuant takeover of IDB, is pending the court's approval. A hearing on the matter has been scheduled for early next week.
"The rumors that IDB will be changing hands soon are premature," Dankner told reporters after Sunday's vote. "Not all the votes have been counted and the court has yet to rule on the matter. I believe that the final word on the matter has not been said and that the end result will be deferent."
Still, a source privy to the moves currently pursued within the company said, "I would be hard pressed to believe that the court would set aside the creditors' vote. Due process was met, the vote was orderly and the result was appropriately obtained."
Should Dankner be ousted from IDB, he would be unable to pay back his personal debts -- believed to amount to hundreds of millions of shekels -- to the banks. Defaulting on these loans may force him to file for bankruptcy.
Should the court ratify the Elsztain-Ben Moshe takeover, this would a doubly bitter pill for Dankner to swallow, as he was the one who sought out the Argentine businessman's help to keep the company afloat. Elsztain was originally meant to invest $75 million in the company, but a personal rift between the two eventually prompted him to partner with Ben Moshe and opt for a hostile takeover.