First Israel Mezzanine Investors Fund (FIMI) is set to commence its investment in El Al Israel Airlines Ltd. (TASE: ELAL) controlling core in the coming days. The commencement of the deal comes after FIMI has completed its due diligence investigations into the carrier over the past few months.
At the end of January, FIMI announced that it was investing up to $60 million in El Al in several stages. The date for completing the deal was set as March 11 but that was extended until April 8.
In and when the deal is finally completed, FIMI will immediately inject $5 million into El Al for an allocation 5.7% stake at NIS 0.62.5 per share, a 15% premium on the current market price. At the same time, FIMI will by shares for a similar amount from Knafaim Holdings Ltd. (TASE: KNFM), the current controlling shareholder, which is controlled by the Borovich family.
But even signing of the agreement and holding 11.4% of the airline's shares does not guarantee that the full investment will be completed. The main investment of $30 million by FIMI for a 25.5% shareholding is dependent on a collective work agreement being signed by August 2013. This is a major obstacle because up to now El Al's management has not been able to reach such an agreement with its employees.
If a collective agreement can be reached and the various government and antitrust approvals granted then FIMI will have an option to invest a further $20 million and raise its holding in El Al to 42%.
Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2013
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