El Al Israel Airlines (LY, Tel Aviv Ben Gurion) is pushing back against the acquisition of a controlling 43% stake by 27-year-old yeshiva student Eli Rosenberg, alleging he is simply a front man for his father Kenny Rosenberg, who is not - as required by law - an Israeli citizen, according to a letter from its lawyers.
A legal representative of the cash-strapped carrier’s board of directors has written to Minister of Defence Benny Gantz, Minister of Transport Miri Regev, and Minister of Cyber and National Digital Matters David Amsalem, asking them to reconsider handing control of the flag carrier to the Rosenbergs.
As previously reported, Jerusalem-based Eli’s newly created Kanfei Nesharim Aviation bought USD107 million worth of El Al stock in a share offering on September 16. Last week, he reportedly told the company he would soon make changes to the board.
He has enlisted an entourage of experienced advisors including Reem Aminoach, founder of one of Israel's biggest accounting firms, Shtainmetz Aminoach & Co. But control of El Al has not yet been formally transferred to him. The three ministers’ approvals must first be given to the Government Companies Authority.
“According to the laws and terms of El Al, control must always be in the hands of a citizen and resident of Israel,” the lawyer’s letter said, cautioning that control by an American citizen could cause problems with flying rights to other countries.
It claimed that El Al had obtained data showing Kenny Rosenberg, who is chief executive of a New York-based chain of nursing homes, controls Kanfei Nesharim, and it requested an urgent meeting with government officials.
Current controlling shareholder Knafaim Holdings, owned by businesswoman Tami Mozes-Borovitz, saw its stake diminish in the offering from 38% to 15.2% and is now believed to be attempting to prevent the transfer of power, according to the business daily Globes.
Eli Rosenberg, however, has remained hidden from public view and has not spoken to the media. Even some of his advisors have yet to meet him, Globes reported.
Rosenberg “lacks independent means and lacks business experience, and all this is to create a false appearance as if the controlling shareholder is so-to-speak an Israeli resident,” the lawyer’s letter said.
El Al, which suspended scheduled passenger flights in March, has posted two consecutive years of losses and has accumulated debt as it renewed its fleet. Most of its 5,940 employees remain on unpaid leave.
