the businessman Kenny Rosenbergthe controlling owner of the airline Al Al seeks to strengthen his hold on it – an investment on which he is currently losing more than 50%.
Rosenberg recently addressed the board of directors Al Al In the proposal to convert part of the loans the owner gave to the company, to the company’s capital. Following the appeal, El Al’s board of directors established an independent board committee to examine his proposal. According to El Al, as of this date, no agreements have been reached between the parties.
El Al was traded on the stock exchange on Monday at a value of approximately NIS 640 million, with Rosenberg holding 39.1% of its shares (through the private company Knafi Nesher), worth approximately NIS 250 million. The total of Rosenberg’s owner loans to El Al currently stands at $70 million (about NIS 240 million), so converting the owner’s full loans according to the company’s current market value would increase his holding rate in El Al to about 55.6%.
Rosenberg became the controlling owner of El Al about two years ago, after investing about NIS 360 million in the company as part of a capital raising it carried out. The recruitment was then intended to prevent the collapse of El Al, which ran into serious difficulties as a result of the Corona crisis. Later, Rosenberg injected another 166 million shekels into El against the allocation of additional shares, and even provided her with owner loans amounting to approximately 70 million dollars.
Rosenberg’s losses on the investment currently amount to hundreds of millions of shekels.
The conversion to shares will strengthen El Al’s position
The conversion of the owner’s loans into shares is a stakeholder transaction, and therefore requires the approval of the El Al Board of Directors’ audit committee, the approval of the entire board of directors, as well as the approval of the company’s shareholders’ meeting, with the support of a majority of the minority shareholders (shareholders with no personal interest in the decision).
El Al reported last month that it ended the third quarter of 2022 with revenues of $626 million and a net profit of $67 million. However, the company still operates with a deficit of $328 million in equity, and therefore converting part of the debt into shares will strengthen its financial position and improve its liquidity.
Following this deficit in equity, El Al’s auditors drew the attention of the report’s readers to the subject, as well as to the actions taken by the company’s management to improve its operational and financial situation.
At the same time, the auditors removed the “going concern” note from the company’s financial statements – for the first time since the Corona crisis.
It should be noted that since the end of the third quarter, El Al has managed to complete the full repayment of the loans advanced to it by the State of Israel, in a total amount of 45 million dollars.