JERUSALEM (Reuters) – El Al Israel Airlines said on Tuesday it raised 250 million shekels ($77 million) in a sale of options on the Tel Aviv Stock Exchange, meeting a key condition for a state-backed loan needed to repay the flag carrier’s debts.
The airline said some $50 million came from controlling shareholder Eli Rozenberg, a 27-year-old student who bought the cash-strapped carrier in October, and $27 million from institutional investors.
El Al has reported losses for two years and racked up debt to renew its fleet. It suspended scheduled passenger flights last March at the outset of the coronavirus outbreak when Israel closed its borders to foreign citizens.
It began to open up some routes in late 2020 to Israeli citizens, but was forced to halt those flights when the government shut the airport in a bid to contain the virus last month.
Israel’s government last year had offered to back 75% of a $250 million loan to El Al conditional on the group slashing expenses and issuing $150 million worth of new shares.
With most of its staff on unpaid leave, El Al held a share offering, in which Rozenberg’s newly created Kanfei Nesharim Aviation bought $107 million worth of shares in an offering last September that gave him a nearly 43% stake.
The state agreed to boost the size of the loan — likely from Bank Leumi and Discount Bank — to $300 million with an 82.5% backing, contingent on Rozenberg injecting more cash into the airline.
Eli Rozenberg is the son of Kenny Rozenberg, chief executive of New York-based nursing home chain Centers Health Care.
“We are in advanced negotiations to get the loan and with the completion of the aid framework, we can start the process of repaying our debt to customers and suppliers along with a gradual resumption of flights,” said airline Chief Executive Avigal Soreq.
($1 = 3.2395 shekels)
Reporting by Steven Scheer; editing by Jonathan Oatis