Israeli flag-bearer El Al is seeking to raise around $ 75 million by issuing marketable warrants, in an offer to secure a state-backed loan worth around $ 300 million. dollars.
The issue was approved by Israel’s Ministry of Finance, subject to a commitment by El Al’s controlling shareholder to acquire warrants in the amount of at least $ 50 million.
El Al had recently indicated that he was considering raising additional capital as part of the need for a loan. She has been in discussions for several months with financial institutions for a loan but has not yet finalized an agreement.
The loan requirement was originally estimated at $ 250 million and was intended to complement a $ 150 million stock offering made in mid-September.
But after the Israeli government’s pandemic lockdowns, the finance ministry agreed to increase the debt component to $ 300 million – and increase the proportion of the state guarantee from 75 percent to 82.5 percent. – subject to El Al raising at least an additional $ 75 million. in capital.
El Al has sought to increase the loan amount covered by the guarantee beyond $ 300 million, following foreclosure restrictions that led to the closure of Tel Aviv’s Ben-Gurion Airport, but claims the ministry has not yet responded to the request.
The airline is still negotiating with Israeli banks over the loan, adding that the main terms have been agreed in principle but no binding documents have been signed.
El Al says the loan is “necessary” for him to make “substantial” repayments to customers for canceled flights resulting from the airline crisis – admitting that the combination of a large number of repayments and the situation of the airline’s cash flow means that it has not been able to make the repayments by the dates set by the relevant laws.
Along with capital and loans, the airline is earning $ 70 million from refinancing aircraft and engine transactions, bringing the cumulative funding total to $ 445 million in February 2021. “All of this is a” cushion of ” security “against changes in the market,” he said.
The carrier emphasizes that a time frame for the return to regular and important flight operations is “difficult to estimate,” and will depend on several factors, including the speed at which Israel’s vaccination program against the pandemic is proceeding.
El Al and its subsidiaries have some 5,250 employees on leave and the carrier says they will return as flight volumes resume.