El Al Israel Airlines Ltd. (TASE: ELAL) is set to be nationalized. The board of directors of the financially troubled Israeli flag carrier has agreed to accept the Ministry of Finance plan by which it will receive a 75% guarantee from the State for a $250 million loan and it will hold a $150 million offering on the Tel Aviv Stock Exchange (TASE). Shares that are not bought by the public will be bought by the State and thus the Moses-Borovitz family, which currently has a controlling stake of 38% will see its holding diluted. If the public does not buy enough shares and the State has a controlling stake, it will appoint a trustee the company for a period of three years.
At present, El Al's entire fleet of 45 planes is grounded and the airline will have to reach agreement with the various workers committees over the government's deal. The government's plan calls for streamlining measures including shedding 33% of the company's work force. 95% of the work force is currently on unpaid leave.
The El Al Pilots Committee has already declared that it supports the Ministry of Finance plan and that it would be preferable to nationalize the airline than face the financial uncertainty of leaving the company in the hands of the current owners.
The owners had preferred a plan whereby the government would provide 82.5% guarantees for a $400 million loan, while they would inject NIS 150 million into the airline.
Published by Globes, Israel business news - en.globes.co.il - on July 6, 2020
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