Hours after hundreds of Israel Military Industries (IMI) workers stormed the Prime Minister's Office yesterday morning to protest the company's failure to pay salaries, an arrangement was reached to rescue the company.

The treasury agreed to give the company NIS 270 million, although IMI had asked for NIS 350 million. The arrangement was finalized yesterday between the treasury's director general, Kobi Haber, and IMI's chairman, Ovadia Eli.

The company claimed it needed the higher amount to pay salaries for all 2,900 workers, pensions for 1,200 retirees, and bills for water, power, the phone, the Zim shipping company's services, suppliers of raw materials, and more.

Even with the lower amount, IMI said it can at least pay June salaries within a few days, as well as pensions. The company also said it will reach a "fair" arrangement with its suppliers.

Eli said the arrangement would give the management time to stabilize the company, improve assets and privatize plants.

He added that IMI is returning its attention to marketing, to the Israeli army and to foreign forces, adding the company has a $4.1 billion backlog of orders.

In yesterday's protest, a policeman was mildly hurt as he pushed the crowd of workers back. Earlier in the day, the protesters blocked traffic on Jerusalem's Herzl Street before marching on the Prime Minister's Office.

IMI had been illegally withholding salaries as its financial troubles mounted. Last Thursday, the Israel Electric Corporation cut off power to IMI's Ramat Hasharon compound because of a NIS 8.5 million debt.