Eli Rozenberg has the toughest of tasks ahead

El Al and Eli Rozenberg / Photo: Yoav Yaari

26 year-old Eli Rozenberg has never run a major business before. A source told "Globes" that he is eager to prove himself.

Eli Rozenberg is only 26 and he already owns a controlling stake in El Al Israel Airlines Ltd. (TASE: ELAL). In yesterday's $150 million public offering on the Tel Aviv Stock Exchange (TASE) he bought a 43% stake in the airline for more than $100 million. The State bought a 14% stake for $33 million. Former controlling shareholder Tami Mozes-Borovitz has since her stake shrink from 38% to 15%.

So who is Eli Rozenberg and why has he injected so much money into an airline whose entire fleet is grounded? He immigrated to Israel five years ago and lives in the Ramat Eshkol neighborhood of Jerusalem and until recently was learning in yeshiva. His father Kenny (Naftali) Rozenberg is a billionaire living in New York who owns Centers Health Care, a network of nursing and care homes spanning the US.

As a US citizen, his father would not be permitted to control El Al, because although the airline was privatized in 2005, under the terms in which the state retained a 'golden share,' only Israeli citizens can control the company. A source close to the deal who does not deny that the money to acquire the stake in El Al came from Kenny Rozenberg's account said, "El Al will be the first business for young Rozenberg and therefore he will want to prove his abilities."

It was two and a half months ago that Eli Rozenberg approached Re'em Aminoach, through a family friend, Israeli businessman Amikam Ben Zvi, and asked him to help him buy control of El Al. Aminoach offered El Al's board of directors to buy the controlling stake directly from El Al parent company Knafaim Holdings Ltd. (TASE: KNFM) but the offer was rebuffed. Rozenberg was forced to wait until yesterday's public offering, which was a precondition set by the Ministry of Finance for providing assistance to the airline to help it survive the Covid-19 crisis.

A source that knows the Rozenberg family told "Globes," "Kenny identified an opportunity to buy El Al at what he perceives to be a bargain price. He is not bothered whether El Al makes a loss or a profit or the overall condition of the company. Buying El Al is something that lets him be proud in his community."

According to Israel's haredi media it was Rabbi Pinchas Abuhatzeira of Beersheva, Rozenberg's rabbi, who decided that he should buy the company. The source said, "The rabbi says buy and you don't ask questions." The wealth of Rabbi Abuhatzeira himself is estimated at more than NIS 1 billion.

Eli Rozenberg did not win the backing of El Al's board of directors, it would be an understatement to say. There were angry exchanges between the board's lawyers and Rozenberg's lawyers, who cast doubts on the identity of the buyer and his intentions. Eventually the board agreed to meet with Rozenberg, but that did not change their attitude.

The statement put out by Rozenberg's company Kanfei Nesharim last night after it became clear that he was now the controlling shareholder, contained many stinging remarks about the need for the airline to improve.

"Kanfei Nesharim takes upon itself a great responsibility to restore the trust of passengers, and to ensure the jobs of thousands of El Al employees, and lead Israel's airline into a secure future. Throughout recent months Kanfei Nesharim has proven its seriousness, commitment and financial ability to help rehabilitate El Al."

The statement continued, "It is our intention to provide for El Al's benefit an experienced professional staff with proven ability in all the relevant fields to manage a national airline company. The team will lead El Al in becoming a developing and flourishing company operating with the most advanced standards in the global aviation sector. El Al controlled by Kanfei Nesharim Airlines will put a special emphasis on punctuality for all flights, investing in major resources to improve service and improve trhe flying experience for all its customers, and working to upgrade the food served to passengers in all classes."

It is clear that Rozenberg has much to do in order to rehabilitate El Al. Deep changes are needed, and while it is not yet clear who will be the chairman and CEO, some of his senior team has been named. They include Jason Greenblatt, who has served as President Trump's Middle East envoy. Greenblatt, who is expected to serve on the board of directors, tweeted last night. "Now it is clear who was serious about buying El Al and taking it to new heights."

Other members of Kanfei Nesharim's management team are former Israeli Ambassador to the UN Prof. Gabriela Shalev, a jurist who is today a member of the Higher Academic Council at Ono Academic College, and who will be responsible for legal matters; former IDF Head of Central Command Major General (res.) Roni Numa, who will be responsible for security matters; Reem Aminoach, head of the UHY Shtainmetz Aminoach & Co. accountancy firm, will be responsible for financial matters; Moti Engelman, CEO of Reut Airways, will be responsible for aviation matters. Also on the management team is economist Doron Cohen, a former coordinator of staff in the Ministry of Finance's budget division and a former head of the Government Companies Authority.

A spokesperson for Rozenberg told "Globes," "The deal will be completed in the coming days and then we will present our plans for El Al."

Like most airlines around the world, El Al has been hit hard by Covid-19. But the airline was making losses before the crisis due to debts from buying new aircraft and overstaffing. An agreement has been signed with the Histadrut under which 2,000 of the airline's 6,000 personnel will be laid off, and El Al has agreed to sell some of its planes and give up some of its routes.

After raising $150 million in yesterday's offering, El Al now plans issuing a $250 million bond with a 75% State guarantee. But El Al owes passengers NIS 1 billion for flights that have been cancelled and has heavy debts to suppliers.

The airline halted most operations in March and grounded its entire fleet in June but today announced the gradual restart of passenger and cargo flights. Eli Rozenberg has much work to do.

Published by Globes, Israel business news - en.globes.co.il - on September 17, 2020

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

El Al and Eli Rozenberg / Photo: Yoav Yaari
El Al and Eli Rozenberg / Photo: Yoav Yaari
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