After more than six months of negotiations, Nochi Dankner, the former controlling shareholder of the IDB concern, is close to reaching an agreement with the banks regarding his private debts.
The outline of the arrangement that is taking shape indicates that despite the banks' efforts to extract as much as possible from Dankner, in relation to the scope of the original debt, this is not a particularly impressive achievement.
Dankner has private debts to banks in two companies - Ganden, through which he held control of IDB, and the company that holds it, Tomahawk. The total debt of the two companies to banks is estimated at over NIS 800 million, while the debt settlement only covers an amount of NIS 480 million, which is the amount of Dankner's personal guarantee for the total debt.
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The bank holding the largest guarantee for Dankner is Hapoalim, with NIS 150 million, followed by Leumi with NIS 120 million, for the debt in Ganden. In addition to Dankner's guarantee, Leumi also holds guarantees from other shareholders in Ganden - Efi Fisher, the Schimel brothers and Dankner's sister, Shelly Bergman, who has already repaid the bank about NIS 25 million.
Dankner also has a personal guarantee to Discount, in the amount of about NIS 100 million, and to Mizrahi Tefahot, in the amount of NIS 60 million. He also owes another debt to Credit Suisse, in the amount of NIS 40 million, and to Union Bank, in the amount of NIS 10 million.
Of this guarantee amount, Dankner is supposed to repay NIS 180 million in the next five years, with the remaining NIS 300 million depending on the scope of his future income, which is a big question mark.
This means that out of the original 800 million shekel debt, the banks will likely see less than a quarter of the amount. If the future is positive for Dankner, they will probably see a little more.
Dankner does not have many personal assets, his main asset is the villa in Herzliya Pituach, which is estimated to be worth about 40 million shekels. Dankner is expected to sell the house in the coming year, and transfer half of the amount to the banks. The other half will remain with him since half of the house is registered in his wife's name.
As mentioned, Dankner is expected to repay a total of NIS 180 million in debts within five years. Most of the amount will come from his associates, led by his father, Yitzhak Dankner, who is considered a wealthy man.
And what about the remaining 290 million shekels?
Dankner and the banks have agreed on a mechanism whereby 60% of his future income will be transferred to the banks and divided between them according to their share of the debt. However, as mentioned, it is unclear what that source of income will be, especially in light of the fact that a trial is expected to be opened against Dankner in the near future on suspicion of stock trading. A trial that is unclear when and how it will end.
The emerging arrangement is not an achievement or victory for either side, so what guided them anyway?
Dankner hopes to embark on a new path: The choice to reach an arrangement is not trivial for Dankner, as he could have resorted to bankruptcy proceedings. After that, he would have received the same funds that his father and his associates would now be funneling to the banks as part of the farm arrangement and recovered financially.
But for Dankner, pride and image are very important. Dankner is trying to regain legitimacy and return to the business world.
He will probably remove the cloud of heavy personal debts soon, but a heavier cloud, the suspicion that he ran up shares in IDB, still hangs over him and threatens the long-awaited comeback.
The banks hope to weather the storm: From the banks' perspective, it would have been better to reach an arrangement in which Dankner would receive assistance from his associates, as the alternative of bankruptcy would have left them with only a few tens of millions of shekels.
The banks, which had long understood that they probably would not see most of the money they lent to Dankner, also took into account the media consideration. Everyone remembers the storm caused last year to Bank Leumi and its head, Rakefet Rusak Aminoach, after it was learned that the bank intended to write off 150 million shekels of the company's debts to Dankner's liking, as part of a debt arrangement (incidentally, under that arrangement, Leumi would have received a significantly higher amount than the current arrangement).
It was important for the banks to achieve two "achievements" in this regard, which would buy them protection against a repeat of the Leumi storm: The first is that Dankner sell his house. The banks even insisted that as part of the arrangement, it be determined that Dankner would not remain as a tenant in the house. This is an unusual demand, since a creditor should not care about such a thing, but the banks understood the public significance of a situation in which Dankner remained living in his luxurious home.
The second issue is the debt cancellation issue. After the Leumi storm, the banks did everything in their power to ensure that the word cancellation did not appear in the arrangement. But what can be done, Dankner does not have the ability to repay the entire debt, even if he has most of it. Therefore, an elegant solution was found, which is to spread it out until an unknown date, or if you like: "until his last day," even if in practice, the chance that Dankner will be able to meet the repayment is quite slim.
Nochi Dankner's NIS 480 million debt settlement:
A debt of 180 million shekels will be spread over the next 5 years for Dankner.
Source of repayment: Half of the payment from the sale of the villa in Herzliya (about 20 million shekels), and assistance from associates, primarily his father.
A debt of 300 million shekels will be spread out over an uncertain future date, with Dankner transferring 60% of his annual income to the banks.
