On Wednesday evening, El-Al raised NIS 505 million ($147 million) in a public offering. Control of the company passed into the hands of a young Haredi businessman named Eli Rosenberg – his age in Israeli media reports has ranged from 26 to 29), who purchased about 43% of the shares in El Al through the company he controls, Kanfei Nesharim (Eagles Wings Aviation).
Tami Mozes Borovich, the controlling owner of Wings Maintenance, lost her controlling majority in El Al.
After introducing the company’s new board of directors, which will include Jason Greenblatt, remembered by all of us from the Trump administration’s peace efforts. Greenblatt was recruited both because he is a shrewd businessman and because he knows all of Israel’s top officials.
Rosenberg is expected to replace the entire current EL AL management, and, here’s a good sign: the pilots’ committee, which was suspicious, if not outright hostile toward the previous management, welcomed the change of ownership in the company and offered its support from the start for Rosenberg’s team.
The new boss promised the pilots that they would be getting options in the company as soon as El Al manages to recover from the crisis it’s in.
Tami Mozes-Borovich, whose company owned a controlling share of El Al, was hoping that the state would bail her out without any investment on her part. But Israel’s Finance ministry gave her an ultimatum: put in your own money, or bring in a major investor’ or issue new stock – because the Israeli taxpayers are not going to be the only ones paying to keep the national carrier in the air – especially since the said national carrier is privately owned.
As the controlling share owner of El Al, Mozes-Borovich – those names represent two of the richest families in Israel – acted as an unchallenged monarch. Many suggest that although you can’t pin the coronavirus pandemic crash on her, her management style didn’t help. When the takeover threat of the Rosenberg family became evident earlier this year, Mozes-Borowitz did everything in her power to retain her control – everything except pouring the much-needed funds to keep the company alive. Among other things, the grounded El Al is facing potential lawsuits by customers who bought tickets worth hundreds of millions and demand a refund.
But the two investors Mozes-Borovich was hoping to convince to put their money in El Al, Meir Gorowitch and David Sapir, both backed out, and the takeover by the Rosenberg outsiders happened.
The amount of the state’s investment in Wednesday’s issue reached NIS 100 million ($29 million), and it will hold upwards of 15% of El Al’s shares. The maximum investment amount reported by the state before the issue was NIS 265 million ($75 million) –about half of the issue amount.
Following the offering, the value of the EL AL share increased by approximately 6%, and the company’s value is expected to be around NIS 900 million ($262 million). The corona crisis swept El Al into a perfect storm of business failures, and by the end of August, the airline posted a huge loss of $244 million in its financial statements for the first half of 2020, 4.5 times the $55 million loss it showed in the first half of 2019.
The new controlling shareholder in El Al, Eli Rosenberg, is a Haredi young man who lives in Jerusalem. He is the son of Kenneth (Naftali) Rosenberg from New York, who deals in income-producing real estate and owns, among other things, hotels and nursing homes across the United States. Rosenberg Sr.’s fortune is estimated at half a billion dollars. Since the ownership of El Al requires Israeli citizenship, Rosenberg Jr. recently replaced his resident card with a blue ID card and became an Israeli citizen.
Kanfei Nesharim on Wednesday issued a statement saying: “We take upon ourselves an important national responsibility to lead EL AL to a secure future. We will place special emphasis on meeting schedules, improving the service experience for all customers, and upgrading the food served to passengers in all departments.”
OK, so you know they flew El Al some time in their lives. That line about placing special emphasis on meeting schedules on all flights sounds too real to be just some copywriter’s idea of a talking point. For years, El Al’s name has stood for the acronym, Every Landing Always Late. And the part about upgrading the food – gold.
The statement added: “We intend to provide EL AL with an experienced professional team with proven capabilities in all fields relevant to the management of the national airline, a team that will lead El Al to be a developing and growing company that operates with the most advanced standards in the global aviation industry.”
Now, there’s a polite corporate equivalent of in-your-face, rich lady.