The representative of the investor who is interested in buying financially troubled El Al Israel Airlines Ltd. (TASE: ELAL) has submitted an official request to the Government Companies Authority to receive a permit to control the flag carrier. However, Government Companies Authority head Yaakov Kvint has first directed the buyer to notify El Al itself.
The potential buyer's representative Brig. Gen (res.) Reem Aminoach, has asked to begin the proceedings that would allow the investor to receive control of the airline, sources inform "Globes." Kvint told the representative to submit the request to El Al's company secretary, according to the airline's regulations, which has been done.
Meanwhile, the handling of the request has been halted after El Al's board of directors voted to accept the State's rescue plan and begin the process of a public offering on the Tel Aviv Stock Exchange (TASE) - a process which is expected to result in nationalization, with the government buying most of the new shares.
Under the Ministry of Finance rescue plan, the government would guarantee 75% of a $250 million loan and $150 million would be offered in new shares, with the government buying all shares not purchased by the public.
The potential buyer is believed to prefer buying control of El Al without the need for a public offering, even though this might be a more expensive way of accomplishing the acquisition. The existence of such a mystery buyer, bearing in mind El Al's woeful financial position due to the Covid-19 crisis, has raised many eyebrows.
Sources close to the buyer insist that the motives for the purchase are Zionistic and patriotic. A source close to the person said, "We are talking about a person who donates generously, and in this way he can help the company and its employees and he knows that he won't see profits in the near future." The buyer is Israeli, which is part of the terms included in the golden share that the government holds in El Al.
If the buyer's request is accepted, the permit for controlling the company would be held by Harel Locker, who is chairman of Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1). As revealed by "Globes," Locker has agreed to serve as trustee for whoever buys El Al's newly issued shares.
In all likelihood, after the potential buyer receives a permit to control the airline, Locker will contact the current controlling shareholders Tami Moses Borowitz and Izzy Borowitz, and offer to buy control of the company on terms that are preferable to nationalizing the company.
El Al is in the midst of streamlining with agreements signed with three of the four workers committees involved in the airline, which will save the company $120 million annually in reduced manpower and other savings. An agreement is yet to be reached with the pilots association.
Published by Globes, Israel business news - en.globes.co.il - on July 8, 2020
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