Company News

Israel grants control of El Al to young buyer over board objections

TEL AVIV, Oct 2 (Reuters) - Israel’s privatisation body on Friday granted control of El Al Airlines to religious student Eli Rozenberg, putting faith in the 27-year-old’s plan to turn around the cash-strapped flag carrier.

Rozenberg’s purchase of a controlling stake is opposed by the board of El Al, which alleges he is a frontman for his non-Israeli father.

Rozenberg’s newly created Kanfei Nesharim Aviation bought $107 million worth of shares in an offering last month that gave him a nearly 43% stake in Israel’s cash-strapped flag carrier.

Kanfei Nesharim received a control permit for the airline from the Government Companies Authority on Friday, signed by senior government ministers, including defence minister Benny Gantz and finance minister Israel Katz, the company said.

Reiterating past promises for a board shake-up, Kanfei Nesharim said it would “contact El Al immediately with the aim of replacing the company’s board of directors and allowing it to begin managing the company while setting priorities for recovery.”

A spokesman for El Al did not immediately respond to a request for comment.

The airline’s board last week asked government ministers to reconsider giving Rozenberg control, arguing that he represents the interests of his father Kenny Rozenberg, chief executive of New York-based nursing home chain Centers Health Care.

Under Israeli law, control of El Al must be held by an Israeli citizen. While Eli Rozenberg is an Israeli citizen and resides in Israel, his father is not.

El Al, which has reported losses for two years and racked up debt to renew its fleet, suspended scheduled passenger flights in March at the outset of the coronavirus outbreak when Israel closed its borders to foreign citizens.

Most of its 5,940 employees remain on unpaid leave.

Israel’s government has offered to back 75% of a $250 million loan conditional on the group slashing expenses and issuing $150 million worth of new shares.

In the offering, Israel’s government bought a 15% stake for $34 million, while the holdings of El Al’s current owners, Knafaim Holdings, fell to 15.2% from 38%.

Additional reporting by Steven Scheer, editing by Louise Heavens