Israel’s government is to provide financial assistance to operator Israir Group in exchange for convertible bonds.
The ministry of finance has agreed to provide 33 million shekels ($9.4 million) to the company’s aviation and tourism division.
It will provide the funding in US dollars, and receive convertible bonds as collateral for a period of three years.
The funds will be used partly to repay loans in order to save interest expenses.
Israir will convene a shareholders’ meeting on 13 December to seek approval for the proposal, which comprises a state commitment to provide funding in the ratio of 3:2 in relation to investment by the company itself.
Under the agreement the state will be entitled to convert any outstanding balance to shares, provided that the allocation to the state does not exceed 24% of the company’s capital.
The company will need to comply with conditions of the agreement within 45 days.
Israir was sold to investment company BGI in an auction and, under the state funding agreement, the controlling owners – entrepreneurs Rami Levy and Shalom Haim – will be required to retain at least 25% of the capital.
Over the first half of this year the company generated revenues of $141 million and a net profit of $6.3 million.
