Investor Rozenberg Ups Offer to Buy Control of Israel's El Al to $101 Million

In letter to government officials, Eli Rozenberg commits to buying two thirds of the airline’s upcoming share offering

Yoram Gabison
Send in e-mailSend in e-mail
An El Al plane takes off from Ben Gurion Airport, September 20, 2019.
An El Al plane takes off from Ben Gurion Airport, September 20, 2019.Credit: Moti Milrod
Yoram Gabison

Eli Rozenberg, one of three investors who have said they want to buy control of El Al Airlines, said Monday he was increasing his commitment to buying shares to $101 million from a previous $75 million.

The enhanced offer comes just days before the airline, which has been laid low by the coronavirus pandemic, is due to sell $150 million in shares to the public on the Tel Aviv Stock Exchange as part of a government-orchestrated rescue plan for the airline.

It means he intends to buy up two thirds of the share offering.

“We hope that the offering will be carried out on time, and in a transparent and fair manner, and that no further difficulties will be raised against my client in connection with his participation in this proceeding,” Rozenberg’s attorney Adi Zaltzman said in a letter to treasury director general Keren Terner-Eyal and other officials.

“We are confident that immediately after the offering process my client will become the controlling shareholder in El Al,” the letter said.

The offer by Rozenberg, scion of a New York family that controls nursing homes and other health care businesses, is competing for control of the airline with Meir Gurvitz, a British-Israel businessman who has real estate interests in the U.K. and Israel, and David Sapir, a Russian-Israeli businessman. Rozenberg was the first to express interest, at the start of July, and is the only one of the three to have received a permit to control the airline.

In addition, Tami Mozes Borovitz, who controls 38% of El Al through the publicly traded company Knafayim, is believed to be angling to retain control.

If Rozenberg follows through on the promise, it would enable the government to avoid taking control of El Al. The treasury has promised to buy any shares that the public doesn’t at a price of 67.1 agorot (about 20 cents) each, their average TASE-traded price in May. Rozenberg said on Monday that he would pay the same price for the stock.

El Al shares, which have rebounded amid interest by investors in acquiring the carrier, were down 1.2% in mid-afternoon trading on Monday at 74 agorot.

The offering, which must be completed by August 30, is a prerequisite for a government promise to guarantee 75% of $250 million in loans to be taken El Al as part of a rescue package. The carrier, already ailing before the pandemic struck, has been grounded for months and, on top of its other debt, faces a huge bill to repay holders of canceled tickets.

Rozenberg said in the letter that he was counting on the government to keep to its rescue-plan commitments if he gains control of the airline.

Citing continued restrictions on international air travel, El Al said last week said it was extending unpaid leave for its more than 6,000 employees until the end of September, so it would not be resuming flights.

Although Rozenberg met with El Al directors last week, as his letter hinted, his offer has not been welcomed by the airline.

Comments