Brown Hotels mulls buying Israir from IDB

Israir Photo: Moni Shapir

The price in the proposed deal is $70 million in cash, including $30 million from a loan to be taken by Israir.

The Brown Hotels chain is considering the acquisition of Israir Airlines and Tourism Ltd. from IDB Development in a leveraged deal. If the proposed deal goes through, it will substantial increase Israir's risk profile. Under the deal, Brown Hotels will pay IDB Development $70 million in cash for full ownership of the airline. $30 million of the price, however, will come from a loan taken by Israir.

The deal requires approval from Bank Leumi (TASE: LUMI), which provides most of Israir's credit, and Israir's board of directors, which has yet to discuss the proposal. A source involved in the negotiations said that the financing for the deal would put Israir's existence at risk.

Israir has been up for sale for the past year, after the Antitrust Authority director general refused to approved the sale of the airline to El Al Israel Airlines Ltd. (TASE: ELAL). Since then, IDB Development has looked for another buyer for Israir. Various offers have been made by private equity funds and private investors.

The proposed deal will increase Israir's leverage. High leverage was the main cause for the downfall of airlines around the world in recent years. Israir's own management is unlikely to support the proposed deal.

Published by Globes, Israel business news - en.globes.co.il - on January 30, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Israir Photo: Moni Shapir
Israir Photo: Moni Shapir
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