Businessman David Sapir submitted an offer to El Al’s board of directors to immediately inject $51 million into the company in exchange for 190 million shares, which works out to 27.7% of the company. The offer reflects a price of 0.90 shekels per share, which is a premium of 21% over El Al’s value as of the beginning of trade Wednesday.
Under Sapir’s proposal, he would receive exactly the quantity of shares currently held by Tamar Mozes Borovitz’s company Knafaim Holdings, thus giving Sapir and Knafaim joint control over the company. The cash injection would dilute Knafaim’s holding to 27.7%, down from the current 38.3%.
Sapir’s proposal, which was submitted first to Mozes Borovitz, states that he received initial approval from Deutche Bank for a $400 million loan with 75% backing from Israel’s government. Sapir said the loan would bear an interest rate 2 percentage points lower than what Israeli banks have offered El Al.
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Sapir’s proposal would require El Al to scrap a planned $150 million stock sale. Sapir is also offering acquisition contracts for airplane fuel at lower rates than El Al is currently playing, as well as deals with foreign companies that would increase El Al’s income.
Sapir has Russian and Israeli dual citizenship and a medical degree. Most of his business dealings are in Germany and Russia, primarily in the fields of communications, infrastructure and technology. Sapir applied to the Government Companies Authority for permission to buy a controlling share in El Al, and has former Government Companies Authority commissioner Eyal Gabbay serving as a business advisor.
Sapir’s proposal is the third one El Al has received, following British Israeli real estate investor Meir Gurvitz’s proposal to buy a share of the company that would give him joint control with Knafaim, and after U.S.-based Rozenberg family offered to inject $75 million into the company for 44.99% of its shares, thus taking control from Knafaim.
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At the beginning of the week, El Al published a shelf prospectus for a $150 million stock sale. The government committed to buy any shares that are not bought by the public.
El Al is in dire financial straits. The company has suspended all flights due to the coronavirus pandemic and is contending with a huge debt, but a government rescue package has yet to be put into place. The company has until the end of September to refund some $80 million in tickets for flights that were cancelled due to the coronavirus. It also owes another $190 million to foreign ticket holders and has debts to banks and suppliers.