American family makes an offer for controlling stake of Israeli flag carrier, El Al Airlines
Eli Rozenberg, the 30-year-old scion of a New York family in the nursing home business, made his offer on Monday for control of El Al Airlines, Israel’s flag carrier. He said that he and his family were prepared to pay $75 million for an allocation of shares that would give him a 44.99% stake.
According to a report by Haaretz, the stake is the maximum he can offer to achieve control of Israel’s flag carrier without having to make a general offer for all the shares, under Israeli regulations.
The offer, which was presented to the Israel Companies Authority and the Finance Ministry, values El Al at $95 million, 5% more than its market capitalization on the Tel Aviv Stock Exchange prior to the announcement. El Al shares closed up 5.4% at 63 agorot (18 cents) on Monday, the Haaretz report says.
Rozenberg’s father is Kenny Rozenberg, founder and CEO of Centers Health Care, which operates nursing homes and other health care businesses in the United States. Unlike his father, Eli Rozenberg has Israeli citizenship, a prerequisite for controlling El Al, so the application was filed in his name.
Rozenberg said that to demonstrate the seriousness of the offer, he had opened a trustee account at Mizrahi Tefahot Bank, in which he deposited $15 million. He said the offer is valid until the end of August, subject to government approvals and that nothing occurs in the interim to fundamentally change El Al’s condition, reports Haaretz.
Rozenberg said that unlike an earlier plan to gain control of El Al by buying control of Knafaim, a publicly traded company controlled by Tami Mozes Borovitz that holds 38% of El Al, the current offer would help improve the financially troubled airline’s finances. Knafaim had rejected the offer.
El Al, struggling in an increasingly competitive air travel market, was further devastated by the coronavirus lockdowns. It has suspended all flights until the end of August and is carrying debt of more than $1.5 billion, including refunds it owes on tickets for cancelled flights.
According to the Haaretz report, the carrier’s board agreed two weeks ago to a government rescue plan that could end Mozes Borovitz’s control of the airline and nationalise it. The government offered to guarantee most of a $250 million loan and buy any unsold shares in a $150 million share offering by the airline, a move that could leave it holding as much as a 61% stake.
It appears that the timing and amount of the Rozenberg offer is designed to counter efforts by Mozes Borovitz and some government officials to ease the terms of the government-backed loan, says the Haaretz report.