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El Al claims airline's buyer is front man for his non-Israeli father

Published 09/24/2020, 07:53 AM
Updated 09/24/2020, 07:55 AM
© Reuters. FILE PHOTO: The first of Israel's El Al Airlines order of 16 Boeing 787 Dreamliner jets, lands at Ben Gurion International Airport, near Tel Aviv
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By Steven Scheer

JERUSALEM (Reuters) - El Al Israel Airlines (TA:ELAL) is opposing the purchase of a controlling stake by religious student Eli Rozenberg, alleging he is a front man for his father, who is not an Israeli citizen as required by law, according to a letter from its lawyers.

In the letter seen by Reuters, the financially strapped group's board requests government ministers reconsider giving the 27-year old Rozenberg control of Israel's flag carrier.

Eli Rozenberg's newly created Kanfei Nesharim Aviation bought $107 million worth of shares in an offering last week that gave him a nearly 43% stake in Israel’s flag carrier.

He told El Al this week that he was assuming control of the airline and would make changes to the board.

Rozenberg, who is an Israeli citizen and resides in Israel, is the son of Kenny Rozenberg, chief executive of New York-based nursing home chain Centers Health Care.

"According to the laws and terms of El Al, buying a controlling stake by a foreigner is forbidden," El Al's lawyers wrote in the letter, adding control by an American could cause problems with flying rights to other countries.

It said data obtained by El Al shows Kenny Rozenberg controls Kanfei Nesharim.

El Al's board and representatives requested an urgent meeting with the relevant government officials.

A spokesman for Rozenberg said a legal response to El Al's concerns would come later on Thursday.

El Al, which has reported losses for two years and racked up debt to renew its fleet, suspended scheduled passenger flights in March at the outset of the coronavirus outbreak when Israel closed its borders to foreign citizens.

Most of its 5,940 employees remain on unpaid leave.

Israel's government has offered to back 75% of a $250 million loan conditional on the group slashing expenses and issuing $150 million worth of new shares.

© Reuters. FILE PHOTO: The first of Israel's El Al Airlines order of 16 Boeing 787 Dreamliner jets, lands at Ben Gurion International Airport, near Tel Aviv

In the offering, Israel's government bought a 15% stake for $34 million, while the holdings of El Al's current owners, Knafaim Holdings (TA:KNFM), fell to 15.2% from 38%.

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