Israel’s government has pledged to acquire shares in El Al if necessary, under a revised scheme to provide additional liquidity to the flag-carrier.
El Al has been negotiating a $400 million loan with a state-backed guarantee, but the discussions have yet to be finalised.
The Israeli finance ministry has outlined an alternative path in a letter, the airline has disclosed.
It proposes that El Al take a reduced loan of $250 million from lenders, which will be state-guaranteed.
El Al would also issue new shares to make up the other $150 million, and the government would commit to purchasing any shares to which investors did not subscribe during the offering.
If the government was forced to take the entire issue, it would effectively have a stake in El Al of around 60% at current market capitalisation.
Any shares picked up by the government would be handed to a trustee, and the government would draw up criteria regarding the responsibilities of the trustee, the length of time the shares would be retained, and the manner in which they are sold.
The agreement remains conditional on suitable collective agreements being signed with El Al personnel.
El Al says it there is “no certainty” that the proposal will be adopted, adding that it needs various approvals, including those of the airline itself, the government, and the finance committee of the Knesset, the Israeli national legislature.
