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Israeli Military Industries needs an emergency rescue plan before any decision can be made on a way to privatize the troubled company. The decision was made on Wednesday in a meeting in the Prime Minister's Office.

"Everyone agrees, because all the talk on privatization is just idle chatter, and the company needs an emergency plan," said a participant at the meeting.

The director general of the PMO, Eyal Gabai, called the meeting, which was attended by the director general of the Defense Ministry, Udi Shani, the Finance Ministry budgets director, Udi Nissan, and the head of the Government Companies Authority, Doron Cohen.

IMI's management, the union and the Histadrut labor federation disagree and are applying pressure to pass the matter directly to Prime Minister Benjamin Netanyahu - and to demand more funds from the government. The employees are trying to avoid job cuts and want the state to put up money in advance to protect their salaries and benefits.

The treasury wants to sell the company on the stock market, a move the firm and employees want to avoid.

IMI has negative equity of NIS 1.8 billion, as of the end of 2007, including a NIS 1 billion debt to the state. The situation has only gotten worse since; the company expects to lose another NIS 250 million in 2010.

IMI employees say the treasury is using "employment terrorism" against them, referring to management's proposal to fire 500 workers. The union and Histadrut say they are willing to talk about early retirement for 950 workers.