Failure to issue El Al – do not “fix” the positive headlines – the capital market

Thankfully – we’m pretty obsessed with the story of

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. It just hurts us that this failing and complicated society is “working” on us – the public, over and over again. She receives government support she does not deserve, she for decades was a bloated public body of workers with covert unemployment, with pilots playing her “sick” to get extra money, with one landlord – workers’ committees. In fact not one – there were several house committees, but the bottom line – the employees controlled the company.

A society that lives for one reason – “the state will not let it fall”. A company that lost even when it had to make a profit. It is not the Corona that has overthrown El Al, it has fallen long before, and despite this it is receiving grants and guarantees of hundreds of millions of dollars. So maybe now something has changed – a new landlord who despite his lack of experience in the aviation market, brought in money and at the same time a reorganization plan. There is a future. He really does not warn. But notice what has happened in the meantime – this failed company whose corona has shaved off all its true value is traded at a higher market value than it was before the corona (expansion here). It does not make sense.

Committees on the inflated value are in an issue from yesterday – the issue of options made by the company. The company’s share was around 63-65 agorot and the company, which must raise money, otherwise it will die, issued a prospectus to raise options at a price of 20 agorot and with an exercise price of 30 agorot. That is, the option holders purchase the stock for 50 cents. In such a situation, the stock should be below 50 otherwise of course there will be arbitrage. The ones who bought the options are probably sophisticated players who in the meantime some also sold the stock (and lowered it) and thus made a crazy profit. The stock closed yesterday down 6% to 59 cents, so buying at 50 and selling at 59, leaves an additional earnings of 9 cents per share. Impressive and it’s in one day.

And what is expected today? – Either the options go up or the stock goes down, or both – we bet on both. So to call this issue a success – it’s nonsense, do not believe what’s written in the publicist’s post and elsewhere – is a big failure. Issue is possible, the question is at what price. El Al raised about 250 million in options – $ 77 million, with $ 50 million from controlling shareholder Eli Rosenberg and about $ 27 million from the public.

El Al Chairman David Brodet said, a respected and experienced man, chattered the following sentences – “The Israeli capital market has expressed confidence in El Al as a leading national airline, this is an important step on the way to obtaining a state-guaranteed loan with emphasis on the Israeli capital market. With the new owners Eli Rosenberg and the ability of the new management to lead El Al to a new takeoff ”

El Al CEO Avigal Sorek also presented this as a success – “The trust of the investing public along with the completion of the IPO is another step in the recovery of El Al. “We are in advanced negotiations to raise the loan and with the completion of the Nahal assistance plan in the process of repaying the debt to customers and suppliers, along with a gradual return to flights, with an emphasis on a safe flight plan developed by EL AL in combination with the Ministry of Transportation and the Ministry of Health.”