David Sapir proposes cancelling El Al's public offering

El Al  / Photo: Yoav Yaari

In bidding for joint control of El Al, Sapir says he can replace the offering with a $400 million loan from Deutsche Bank on favorable terms.

The offer of Israeli-Russian businessman David Sapir for El Al Israel Airlines Ltd. (TASE: ELAL) is $51 million for a private placement of shares amounting to 38.3% of the company, a holding identical to that of Knafaim Holdings Ltd. (TASE: KNFM). The price, under the proposal submitted to El Al, is 20% higher than the company's closing price yesterday.

The proposal is for full partnership with Knafaim in the control of El Al. Sapir proposes that the company should forego its planned public equity offering. He says that instead of that he has obtained agreement from Deutsche Bank for a loan of $400 million, with a 75% state guarantee, at a rate of interest substantially lower than the rate offered by the banks in Israel.

The idea is a joint control agreement with Knafaim, with Sapir arguing that the combination of Knafaim's know-how and his financial clout and connections represent the best way of rehabilitating El Al. Sapir intends to move to Israel to deal with running the airline. His proposal includes the purchase of jet fuel from infrastructure companies with which he is connected "which could reduce procurement costs by millions of dollars annually." The proposal also states that "The fact that Sapir's business is based in Europe works in his favor in reaching agreement with European banks (the Deutsche Bank group) to grant a loan on attractive terms, and with infrastructure companies for the supply of fuel."

For Knafaim and El Al, Sapir's proposal is especially interesting because it leaves control in Knafaim's hands and cancels the idea of a public offering. It will increase the bank debt, but it would secure an injection of $451 million which El Al desperately needs.

Sapir (65) divides his time between Russia and Israel. His businesses are in telecommunications and tourism. He is represented in Israel by Advs. Shimshon Chen and Lior Shaby, and is advised by media strategist Merav Lapidot and former head of the Government Companies Authority Eyal Gabay. Like Meir Gurvitz, who has also made a bid for El Al, Sapir awaits a permit from the Government Companies Authority to control the airline. The third bidder for El Al, Eli Rozenberg, has already obtained a control permit.

Published by Globes, Israel business news - en.globes.co.il - on September 2, 2020

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

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