Israel’s government does not intend to exercise the voting rights of shares in El Al which it plans to acquire as part of a refinancing of the troubled flag-carrier.
The ministry of finance, in a 4 September communication to the carrier, has detailed its role in a share issue to be undertaken by the airline.
El Al will publish a tender on 10 September comprising a public offering of 753.3 million shares, with a minimum price of 0.671 shekels – worth 505.5 million shekels ($150 million).
The ministry says the state intends to offer to buy nearly 393.4 million shares as part of the issue, valued at 264 million shekels.
“As long as the shares allotted [to the state] are held by it, it shall not exercise the voting rights granted,” the ministry says.
But it points out that any shares subsequently transferred from the state’s allocation to a third party would also give the party full voting rights.
The state will undertake to sell or transfer its shareholding – either in whole or in part – within 24 months of the acquisition, it adds.
If the offering falls short of the target, the state will commit to purchasing a further allotment or agree with El Al on an alternative.
Should the state pick up all the shares offered it would equate to 60% of the airline’s enlarged share capital.
Once the share issue is “fully implemented”, says the ministry, the state will provide a guarantee for a $250 million loan to be provided through a financing institution.