The FIMI fund agreed to invest up to $75 million in El Al Israel Airlines in return for up to 47 percent of the flag carrier, Israel’s largest private investment fund said on Sunday.
FIMI will form a controlling group in El Al with Knafaim Holdings, which owns 39 percent of the airline. Knafaim has an option to sell FIMI 30 million shares in El Al worth $5 million.
In the first stage, at the time the deal is closed, FIMI will invest up to $50 million for a 38 percent holding in El Al. The fund will receive two options worth $12.5 million each and if both are exercised FIMI will hold 47 percent.
The deal is expected to close by July 31 but FIMI can extend this deadline by a total of 90 days.
“Completion of the deal is a complicated task and requires cooperation among … management, workers and financial institutions,” FIMI founder and Chief Executive Ishay Davidi said in a statement.
He said the company and its workers are negotiating a new collective labour agreement that will enable the airline to deal with the competitive environment in which it operates. The deal is subject to the signing of a new labour agreement that is acceptable to FIMI.
“The challenges facing the company require many changes. Without generating this change the company will find it very difficult to compete,” Davidi said.
El Al posted a wider loss in the fourth quarter, hurt by a military conflict and the global downturn that depressed revenue.
In January FIMI, which has capital of $2.1 billion and has invested in 68 companies, said it was seeking to inject up to $60 million into El Al for a stake of 37.8 percent.
(Reuters)
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If FIMI does indeed buy into EL AL one of the first things they should do is to get the funds to replace and plane’s interior.
The seats are old and uncomfortable, worn out, and outdated.
I fly from Israel to America approximately 10 times a year in business class. Last year I flew EL AL 2 times and was quite sorry I did. I couldn’t even recline my seat and get comfortable. I had to sleep sitting straight up.
Back to Delta Airlines. EL AL, never again.
The seats are brutal. They remind me of the old Tower Air seats. Maybe EL AL bought them when Tower shut down and stored them until needed.