Company Chairman Kenson Shai Zohar and the company’s CEO Avishai Fishman are promoting a complex move to transform the airline Arkia To a public company through a merger into another public company, which is not Kenson. A statement issued by Kenson to the stock exchange states that the goal is to find a receiving company that will merge with Arkia at a value of NIS 100 million to Arkia.
Kenson yesterday signed a memorandum of principles on the subject with the Arkia holding company owned by the Nakash family and which owns 70% of the Arkia airline and tourism company. According to the memorandum of principles, Kenson intends to merge Arkia into a public absorbing company, which will be debt-free and has a cash register of NIS 10 million.
At the time of completion of the transaction, Arkia shareholders will receive 82.64% of the merged company’s shares, while the balance (17.36%) will be distributed to Kenson’s shareholders and should bring with it a flood of value for them. Thus, after completion, the Nakash family itself will hold 57.85% of the merged company’s shares, while Arkia employees, who currently own 30% of the company’s shares, will hold 24.79% of the merged company.
Arkia employees currently own Arkia shares through Tut, but Zohar and Fishman’s plan also includes the actual division of the shares from Tut into the hands of Arkia employees. It should be noted that Kenson has an alternative merger plan with Arkia Holding Company, in case the merger with Arkia itself does not succeed.
The transaction includes additional components, including a commitment by the receiving company to raise additional capital of NIS 30 million at the date of completion of the raising. So in practice, the share of the Nakash family, Arkia employees and Kenson shareholders in the merged company will be even more limited. However, the Nakash family intends to continue to control Arkia, meaning to hold at least 45% of its shares.
Completion of the transaction should leave Kenson shareholders with a holding in tradable shares of two public companies. The first holding will be in shares of Kenson itself, which will maintain its existing operations, while the second holding will be in shares of the merged company that will hold Arkia operations in addition to the funds raised for it.
The transaction between the parties will be subject to a number of conditions precedent, including the approval of the Tax Authority, the Tel Aviv Stock Exchange and more. It should be noted that to the extent that the transaction made by the parties is a transaction in relation to Arkia Holdings, which holds 70% of Arkia’s share capital, Arkia Holdings shareholders will be allotted a quantity of shares of the receiving public company that will comply with this outline.
Arkia is the airline and tourism company that was founded about 70 years ago and has been operating since its inception on domestic and international routes. In the years leading up to the Korna crisis, Arkia benefited from an increase in passenger traffic and replaced the entire fleet of turbo props with new jets, including the Embraer 195 and the Airbus 321 NEO.
Before the Corona crisis and during it, when Arkia’s activity was reduced like all aviation activities in Israel, Arkia carried out significant streamlining procedures in which the collective agreements were updated, the number of employees was reduced and at the same time purchasing conditions and computer systems were improved.