Privatisation of Israel Aircraft industries (IAI) is on course to begin in 1998. An overhaul of the group's structure will be embarked upon as an intermediate step, says the group's chairman, Yanuch Ben-Gal.
He says that IAI will be reshaped into a holding-company structure, with each of the individual business being held as independent subsidiaries. This change is due to be performed in 1997 as a lead-in to privatisation.
"I don't think that anyone would be ready to buy into this big, very diversified, company and therefore the re-organisation is a necessity before we offer something in the stock market," says Ben-Gal. IAI expects to make losses of $40 million this year on sales of $1.5 billion but he says. that the aim is to reach profitability in 1997.
IAI has also recently come to a settlement with a consortium of Israeli banks, ending two years of negotiations over the $180 million it owes. Under the deal, IAI will get a two-year period of grace before starting the repayments and will have another six years to pay in full.
In return, the banks have won a veto over any foreign defence contracts IAI wishes to sign. "We can live with this," says Ben-Gal.
Source: Flight International
