Eli Rozenberg, the only one of the three people interested in buying El Al who has received a permit to acquire control of the financially troubled airline, has raised his bid. Rozenberg is now offering $101 million, after initially bidding $75 million.
Rozenberg presented the Finance Ministry with the offer in a letter on Monday. This offer would make him the potential owner of two-thirds of the national airline’s stocks if the measure is completed, Calcalist reported.
Hit hard by the coronavirus pandemic and a sharp decline in air travel, El Al needs funds to reimburse clients for canceled flights and to stay operational, which is what the future sale of company stocks is meant to achieve.
Israel views the airline as a national asset, which is why it must be owned by an Israeli citizen, which Rozenberg is.
The government’s package to save El Al due to the financial difficulties caused by the pandemic includes a $150 million offering on the stock market and 75% state guarantees for $250 million in bank loans. The deadline for the public offering is August 31. After the offering El Al will also be allowed to withdraw surplus funds of NIS 230 million in the employee’s compensation fund.
It’s possible the state will agree to buy most of such future stocks, which will be a form of pouring public money into the privately controlled company to keep it going.
However, it remains unclear how El Al means to turn a profit even if it rejects Rozenberg’s offer and accepts state aid.