Bank Hapoalim may provide half the financing that the consortium headed by its part-owner, Nochi Dankner, needs in order to finance the takeover of IDB Holding Corporation, private sector sources said yesterday.

The sources said that talks with the banks have accelerated as the Dankner group's reorganization picks up speed.

Ellern Holdings Chair Gadi Dankner estimated yesterday that a series of agreements between the various branches of the Dankner and Gineo families is likely to be signed as early as this week.

As part of these agreements, Nochi Dankner is expected to sell his stake in Israel Salt Industries, which holds an 11% stake in Bank Hapoalim. The sale is a necessary precursor to his planned takeover of IDB Holdings.

Nochi Dankner's Ganden group will need $330 million in external financing to buy 51% of IDB. Bank Leumi has expressed interest in financing 60% of the sum, and there are three principal options for raising the remainder.

One is Bank Hapoalim, which is interested in providing 50% of the credit after Dankner sells his Salt stake. Another is credit from institutional investors, such as the pension fund Mivtachim, which is considering a NIS 200 million investment. Finally, a consortium of other banks could be formed.

As part of the Dankner Group reorganization, Ellern will buy 60% each of Salt, Dankner Investments, and Dor Chemicals for $215 million. The company will fund the purchase with $75 million shareholders' equity, $115 million outside financing and a rights issue.

Dankner said the Ellern rights offering could be carried out within two weeks, while there are "just a few details to iron out" in the financing agreement with Bank Leumi. Closing on the entire deal is expected in October or November 2002.

Management positions in Ellern will be held by Gadi and Danny Dankner, their cousin Dori Dankner and Dor Chemicals Chairman Zvi Mor. Dori's father, Shmuel Dankner, who has been the family's leading businessman, will not have a position in Ellern, but he will hold the position of consultant to a mooted outside advisory council that would accompany Ellern activity.

Dankner emphasized that Ellern's core businesses after the restructuring will be infrastructure, real estate, telecommunications, banking and industry. After a few months, a strategic decision will be made on whether to exit certain areas or enter others.

On the question of the group's leveraging, particularly that of Salt, Dankner stated that Salt will meet upcoming interest payments to Bank Leumi on its loan for the purchase of Bank Hapoalim shares. Most of the funds already exist in the company's coffers, and the rest will come from dividends, unutilized bank credit or a possible bond issue.

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