Israeli gov’t prepared to upgrade aid to El Al – report

Israel’s Ministry of Finance will improve the state aid it has promised to El Al Israel Airlines (LY, Tel Aviv Ben Gurion) and is prepared to give an 82.5% guarantee for a bank loan of up to USD300 million, sources have told the Hebrew-language financial daily Globes. The troubled flag carrier has so far failed to obtain a loan of up to USD250 million, despite government backing of 75%, and has appealed to the ministry in recent weeks to provide a higher guarantee for a loan of up to USD400 million. The government is now likely to embellish its offer of assistance, the sources claimed. The ministry’s assistance plan included two components, of which the credit guarantee via a bank was supposed to make up the second part. The first was a public offering held on the Tel Aviv Stock Exchange in September in which the government said it would buy any shares not purchased by the public. However, in the event, El Al raised USD150 million, with the company Kanfei Nesharim owned by Eli Rosenberg acquiring a 43% controlling stake leaving the government to pick up a 14% stake for ILS116 million shekels (USD35 million). “The issue of loan guarantees is being negotiated between the state and the company, as well as other topics related to the implementation of the assistance plan,” the Ministry of Finance told Globes. At the same time, El Al said: “We do not comment on our dialogue with the Ministry of Finance.” As previously reported, El Al said in its third-quarter financial report, issued at the end of November, that because it had failed to reach a deal with banks, it was “considering an alternative of raising the loan by issuing bonds to the public.” The auditor of the report also attached a “going concern” warning to the results.