El Al asks ministers to nix Eli Rozenberg takeover

El Al plane  / Photo: Yoav Yaari
El Al plane / Photo: Yoav Yaari

El Al insists that Kenny Rozenberg is the real shareholder in the airline and that he does not meet government criteria to control the company.

El Al Israel Airlines Ltd. (TASE: ELAL) is attempting to thwart the transfer of control in the financially troubled airline to Eli Rozenberg. A legal representative of the airine's board of directors has written to Minister of Defense Benny Gantz, Minister of Transport Miri Regev, and Minister of Cyber and Digital Matters David Amsalem claiming that Eli Rozenberg is a 'straw man' acting on behalf of his father Kenny Rozenberg, who is not an Israeli citizen. "We will ask you to consider the request for a permit to control El Al," the letter states.

In last week's $150 million public offering on the Tel Aviv Stock Exchange (TASE), Eli Rozenberg, 26, acquired a controlling 43% stake in El Al for a little over $100 million. Rozenberg immigrated to Israel several years ago and lives in Jerusalem. His father Kenny Rozenberg is a US citizen with a nationwide healthcare group. Since first expressing interest in buying control of El Al, Eli Rozenberg has been surrounded by an entourage of senior Israeli advisors including Reem Aminoach, the founder of one of Israel's biggest accounting firms. Control of El Al has not yet been formally transferred to Rozenberg, with approval from the three government ministers needed to be given to the Government Companies Authority, according to the terms of the state's 'golden share' in the airline.

El Al's current controlling shareholder Knafaim Holdings Ltd. (TASE: KNFM), controlled by Tami Mozes-Borovitz is now attempting to prevent this transfer to Eli Rozenberg, whose company Kanfei Nesharim Aviation has been set up to take control of the airline.

Eli Rozenberg for his part remains shrouded in mystery. He has not spoken to the media and all that has been seen of him is a small blurred image published a month ago. Some of the advisors he has hired have yet to meet him.

The letter sent by El Al to the cabinet ministers says, "According to the law and El Al's regulations, control of El Al must always be in the hands of a citizen and resident of Israel. According to the information obtained by El Al, Kanfei Nesharim is a company controlled by American businessman Kenny Rozenberg, who is not a citizen or resident of Israel. In order to circumvent the legislative restrictions, the shares of Kanfei Nesharim are registered in the name of his son Mr. Eli Rozenberg, a young man who is 26 years old who lacks independent means and lacks business experience and all this is to create the false appearance as f the controlling shareholder is so to speak an Israeli resident."

The letter also details that in the first meeting with Aminoach and a friend of the Rozenberg family Amikam Ben-Zvi, the Israeli businessman who connected Rozenberg with Aminoach, with Tami Mozes and Knafaim CEO Ronen Zioni, they presented themselves as representatives of US businessman Kenny Rozenberg, who was interested in buying El Al.

On the following day, Aminoach even sent a photocopy of Kenny Rozenberg's US passport and wrote, "For your convenience attached are the details of Naftali (Kenny) as they appear in his US passport."

In addition to the fact that Kenny Rozenberg is a foreign resident, El Al also charges that he has a "problematic business background," which allegedly include, "Prohibited practices of taking money out of the US." El Al also claims that a friend of Kenny Rozenberg paid the US government $1.65 million in compensation in order to dismiss charges against her. Similar allegations are made in the letter against another company owned by Rozenberg in the US.

Knafaim also claims that in the initial meeting with Aminoach and Ben-Zvi, the two men were clearly told that a foreign resident could not be the controlling shareholder in El Al. Ben-Zvi reportedly responded. "That won't be a problem, Kenny Rozenberg has a son, a 19 year old yeshiva student who has already been studying in yeshiva in Israel for several years and we will register the shares in his name."

Ben-Zvi did not apparently know then that Eli Rozenberg was 26 and not 19 but regardless such a 'trick' was not acceptable to Knafaim, which at that stage terminated contacts with Kenny Rozenberg's representatives even before the negotiations began.

Knafaim says of Aminoach who applied for a permit to cpntrol El Al in the name of Eli Rozenberg. "Overnight Kenny Rozenberg's representatives became Eli Rozenberg's representatives."

El Al also claims that the de facto control of El Al is in the hands of Kenny Rozenberg after Eli Rozenberg confirmed in his meeting with the El Al board of directors that the source of the financing to buy control of El Al was a 25-year loan from his father, "which was in effect a gift."

The letter concludes that due to these serious claims, "In order to avoid violating the law and regulations, we ask to consider the request of Kanfei Nesharim for a permit to control El Al." In the letter El Al also asked for an urgent meeting with government representatives.

Published by Globes, Israel business news - en.globes.co.il - on September 24, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

El Al plane  / Photo: Yoav Yaari
El Al plane / Photo: Yoav Yaari
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