Eli Rozenberg, the 30-year-old yeshiva student and scion of a New York family in the nursing home business, made his offer Monday for control of El Al Airlines, saying he and his family were prepared to pay $75 million for an allocation of shares that would give him a 44.99% stake.
The stake is the maximum he can offer to achieve control of Israel’s flag carrier without having to make a general offer for all the shares, under Israeli regulations.
The offer, which was presented to the Israel Companies Authority and the Finance Ministry, values El Al at $95 million, 5% more than its market capitalization on the Tel Aviv Stock Exchange prior to the announcement. El Al shares closed up 5.4% at 63 agorot (18 cents) on Monday.
Rozenberg’s father is Kenny Rozenberg, founder and CEO of Centers Health Care, which operates nursing homes and other health care businesses in the United States. Unlike his father, Eli Rozenberg has Israeli citizenship, a prerequisite for controlling El Al, so the application was filed in his name.
Rozenberg said that to demonstrate the seriousness of the offer, he had opened a trustee account at Mizrahi Tefahot Bank, in which he deposited $15 million. He said the offer is valid until the end of August, subject to government approvals and that nothing occurs in the interim to fundamentally change El Al’s condition.
Rozenberg said that unlike an earlier plan to gain control of El Al by buying control of Knafaim, a publicly traded company controlled by Tami Mozes Borovitz that holds 38% of El Al, the current offer would help improve the financially troubled airline’s finances. Knafaim had rejected the offer.
However, in a letter from Rozenberg’s attorneys that El Al released to the TASE, he acknowledged that he had only limited information on the airline.
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“It should be noted that the investor [Rozenberg] has examined El Al’s situation, which is challenging (to say the least), as it has been presented in publicly available reports issued by El Al … and assumes they are accurate, complete and comprehensive,” the letter said, saying Rozenberg was ready to buy the airline “as is.”
El Al, which had been struggling in an increasingly competitive air travel market, has been devastated by the coronavirus lockdowns. It has suspended all flights until the end of August and is carrying debt of more than $1.5 billion, including refunds it owes on tickets for canceled flights.
The carrier’s board agreed two weeks ago to a government rescue plan that could end Mozes Borovitz’s control of the airline and nationalize it. The government offered to guarantee most of a $250 million loan and buy any unsold shares in a $150 million share offering by the airline, a move that could leave it holding as much as a 61% stake.
It appears that the timing and amount of the Rozenberg offer is designed to counter efforts by Mozes Borovitz and some government officials to ease the terms of the government-backed loan. The Finance Ministry wants it to be disbursed in stages according to milestones until the stock offering in the autumn, but Mozes Borovitz and her allies want to get the loan immediately, a move that will buy time to find an investor who is willing to share control of El Al with Knafaim.