El Al Sends Government Its Own Bailout Plan

El Al Airlines has proposed a bailout plan of its own devising, after weeks of negotiations over a state-designed package that would require massive layoffs and possibly lead to nationalization of the flagship carrier.

The airline sent a letter to the Ministry of Finance saying it has found a financial institution willing to extend it a $400 million loan to save it from permanent closure, Globes reported on Thursday. The report did not give details on the terms of the loan referred to.

This would avoid the Ministry’s proposed public offering in which the government would guarantee to buy any shares left unsold to the public.

However, El Al is still proposing a smaller public offering of $40 million and the sale of $110 million in convertible debentures to the government, the paper said.

The Ministry offered El Al a $250 million loan with a 75% state guarantee and a $150 million public offering with the state guarantee. In the event the company were nationalized, a trustee would be appointed to run the airline.

El Al responded that the Ministry’s plan had multiple problems. These include diluting the controlling share of the Moses-Borovitz family, and the several months it would take to mount the offering, at a time when El Al’s plight is immediate. It also cast doubt on the practicality of a trusteeship.