IAI workers chief wants gov't to sell majority stake

Yair Katz / Photo: Jonathan Bloom , Globes

The Ministry of Defense is expected to oppose plans to fully privatize Israel Aerospace.

Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) workers committee chairperson Yair Katz has made an unexpected demand in the context of the offering for the company being promoted by the Government Companies Authority. In a meeting with Government Companies Authority manager Yaakov Kvint, Katz made the workers' consent to the offering contingent on the state privatizing at least 51% of IAI's shares, thereby making IAI a publicly traded company at the end of the process.

Sources inform "Globes" that the meeting between Kvint and Katz took place last Thursday. It was their first official meeting about the emerging plan for an offering. Katz confirmed the report, saying that the reason for his demand was that the measure would release IAI from the many restrictions imposed on it as a government company subject to state regulation, such as salary restrictions imposed by the Ministry of Finance budget director, the difficulty in acquiring companies, and the difficulty in expanding its activity in a highly competitive market. "The goal is separation from the Government Companies Authority. If an offering is held, IAI's workers should at least derive some benefit from it," he observed.

Executives at the government defense industries have been complaining for a long time that they are finding it difficult to recruit the best candidates because of restrictions imposed by the state.

Katz's demand came as a surprise to leading professional staff in the Ministry of Finance and leading IAI executives. Up until now, the plan envisaged an offering of a 25% minority stake in IAI. Such plans have been formulated a number of times in recent years, but were eventually discarded.

IAI's leaders pushed hard for the plan last year, with support from the Government Companies Authority. Sources involved in the plan said that the political situation and difficulties in forming a new government had delayed its implementation for months.

At the same time, IAI and the Government Companies Authority expect that when a new government is formed, the plan will be sufficiently ready to be brought for formal approval, and can be carried out shortly afterwards.

It is doubtful whether the Government Companies Authority will accept Katz's proposal to enlarge the planned IAI offering, because the Ministry of Defense is likely to oppose it. The Ministry of Defense is involved in the process. Former Minister of Defense Avigdor Liberman (Yisrael Beitenu) previously suspended the plan because of opposition by the Ministry of Defense deputy director general responsible for security in the defense establishment.

Published by Globes, Israel business news - en.globes.co.il - on October 27, 2019

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

Yair Katz / Photo: Jonathan Bloom , Globes
Yair Katz / Photo: Jonathan Bloom , Globes
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