El Al Israel Airlines Ltd. has accepted the Ministry of Finance's plan for a public offering next week on the Tel Aviv Stock Exchange (TASE), Trend reports with reference to Globes.
The draft shelf prospectus ahead of the offering will be shown to the Ministry of Finance by September 13 (the Ministry of Finance had been demanding by September 10) and the reports to the public will be published by September 15-16, allowing for the offering to be completed by September 16-17 before the Jewish New Year (Rosh Hashana). The offering will take place, El Al confirms, through a single offering at NIS 0.67 per share.
El Al chairman Yehuda Levy wrote, "It should be mentioned that in the case of the shares offered being oversubscribed at a price above the minimum price, the company reserves the right to cut the amount of the offering to an amount totaling NIS 505 million ($150 million) and allocate the amount of shares derived from this sum."
El Al also confirms that if it opts for a private placement, it will carry it out before this date.
Levy's response followed yesterday's letter from Ministry of Finance director general Keren Terner-Eyal demanding that El Al confirm its acceptance of the planned offering next week.
The Ministry of Finance has also given El Al the green light to move ahead with a private placement instead. Such a placement would come from one of the three people who has bid to buy control in the airline with Israel-Russian businessman David Sapir the candidate seemingly the preferred candidate by El Al's board of directors. Sapir has offered to pay $51 million for an equal share of control in El Al's holding company Knafaim Holdings Ltd. and obtain a $400 million loan from Deutsche Bank. Meir Gurvitz has yet to reveal his offer although he also wants to share control of El Al with Knafaim. If El Al were to raise the $51 million being offered by Sapir in a private placement, then El Al would only be required to raise $100 million in the public offering.
After the public offering, in which El Al cannot choose the buyers of the shares and the government is committed to buying any shares not purchased by the public, the government will provide guarantees for up to $250 million in bank loans. After October 1, El Al will be required to refund up to NIS 1 billion to the public who had bought tickets for flights that have been canceled since mid-March.