Shoshanna Solomon is the Times of Israel reporter on startups and business
To prove it to be serious, the bidder has already deposited $15 million for the acquisition into an acceptance account as true. Rozenberg’s offer is valid until 31 August and, if accepted, would result in a dilution of the shares of all existing shareholders. up to about 45%.
The cash for the transaction will come from Rozenberg’s father, Kenneth (Kenny) Rozenberg, founder and CEO of a chain of retirement homes in the United States. If Eli becomes the new owner of de jure, because he has Israeli citizenship, a precondition for airline ownership: for many it is clear that the father will pull the strings.
Earlier this month, in fact, El Al’s lawyer, Avigdor Klagsbald, asked Eli Rozenberg’s Israeli lawyer for an explanation as to whether Eli represented his father and/or other investors in the acquisition process.
Klagsbald also sought an explanation related to a $ 1. 65 million settlement that Centers Health Care, the retirement home chain run by Kenny Rozenberg, paid the United States federal government and New York State for billing practices. fraudulent.
These questions focused on the affairs of former Rozenberg, with some press articles in the United States providing an unpleasant description of control of some of his retirement homes. These reports paint the image of a company claiming non-profit nursing homes. and transforms them into for-profit machines, firing workers at costs, converting the worker-resident ratio and diluting the quality of patient care.
There were no immediate comments from the gyms related to the reports.
In his correspondence with Israeli regulators, Eli Rozenberg’s representatives said that he, and only he, will be the new owner of El Al if he manages to buy the stake, and that he, not his father, will run the company.
The Rozenbergs, Orthodox Jews of New York, have not reveled in the aviation industry. According to a report published last month in the Hebrew trade newspaper Calcalist, Kenny told him through his rabbi to buy the Israeli airline.
According to the Centers Health Care website, Kenny Rozenberg founded the retirement home chain in 1996, when he created his first nursing home, Williamsbridge Manor, a 77-bed qualified nursing facility in the Bronx.
Since the acquisition, Father Rozenberg has founded and purchased 25 more retirement homes, two more home health care agencies and various medical transportation services; all are components of Centers Health Care, which operates its own services, as well as those of third-party components, according to the company’s website.
The Health Care Centers business now includes nearly 50 nursing and rehabilitation services in New York, New Jersey, Rhode Island and Kansas. It also provides home care, long-term controlled care, adult day care, assisted living, kidney dialysis and walks. in medical services.
More recently, Rozenberg has implemented the Centers for Healthy Living (CPHL) Plan, an approved HMO and Centers Health Care unit, serving New York, as well as Rockland, Niagara and Erie counties, with plans for expand to other spaces. where healthcare facilities operate, says the online page.
It has more than 24,000 workers and caregivers and more than 9,000 long- and short-term citizens in physical care services in the centers, he says.
According to a 2017 article through the Association of Emergency Nurses, the relatives of citizens of the Schenectady Rehabilitation and Nursing Center have expressed considerations about the quality of care in one of the largest and most recent nursing homes in the region, unchanged diapers and bloodless food, due to the lack of staffing conditions.
However, the same 240-bed facility was decided through US News
A 2018 article in Buffalo News quoted an ex-nurse leader at buffalo’s Ellicott Center for Rehabilitation and Nursing, through Centers Health Care, who said she left due to lack and lack of supplies, adding blank towels and sheets, and the inability of facility owners to fix the problems.
More recently, a special Reuters report of June 10, 2020 on nursing homes in the United States revealed “systemic personnel problems,” adding the coronavirus pandemic at the Hammonton Center for Rehabilitation and Health Care. Describes the case of Robyn Esaw, a person with double amputation. who only received assistance for her pelvis after she went to the nursing station and screamed, while another resident sat in a puddle of urine for hours. An outbreak of COVID-19 at the site resulted in 238 infections and 39 deaths. said the report, showing state data.
Centers Health Care, which manages the facility, refused to comment on the maximum accounts of citizens and staff cited in the article, Reuters said, and denied any disruption of house care. The company also questioned an accusation that citizens were not discovered for hours after their deaths, Reuters reported.
In addition, a February 18, 2020 news article reported that a Bronx woman with dementia died after moving out of her home and died of cold. The Women’s Fitness Insurance Provider, Centers Plan for Healthy Living, rejected the 24-year-old daughter’s request- The Healthy Living Centers plan did not respond to 3 requests for feedback, the Daily News reported.
Eli Rozenberg’s offer won the blessing this month from the Israeli Government’s Business Authority, which agreed to submit to the relevant state agencies the granting of an airline permit, whether Eli Rozenberg has acquired EL AL’s compulsory shares or filed a conditional agreement. to buy them.
Eli Rozenberg has also created a team of experts, adding former army officers, lawyers, economists and pilots, to navigate the acquisition of what he said he sees as a possible company, whose role is very vital to Israel.
But two other prospective buyers also contacted the government’s Business Authority regarding the acquisition of El Al. This is Meir Gurvitz, an Anglo-Israeli businessman with genuine real estate operations in the UK and the United States, and David Sapir, a Russian- The Israeli businessman concerned about tourism and telecommunications in Russia, Globes reported this week, but the authority has not given them their approval to date.
At the time of writing, El Al had not yet responded to Eli Rozenberg’s offer and the company is promoting percentages, a precondition for obtaining government-guaranteed loans. “The Al is preparing for an overall percentage factor of $150 million, according to the state bailout framework,” El Al said on a Wednesday, publishing his second-quarter monetary data.
As time runs out, it is unclear whether El Al will be able to meet the August 31 deadline for the percentage offer. The Ministry of Finance reiterated to the Times of Israel that the bailout would not be thought of as if the deadline was exceeded. On Wednesday, Knesset Economic Affairs Committee Chairman Yakov Margi asked Finance Minister Israel Katz to hold a discussion meeting with the committee on the state of percentage sales and bailout.
On August 24, Rozenberg underlined the seriousness of his acquisition he will offer through the promise, in a letter to the Ministry of Finance, which would buy at least $101 million of El Al percentages in the percentage he would be offering if his current $75 million bid for 44. 9% interest is rejected.
“We hope that the sale of shares to the public will take place at the right time and in a fair and transparent manner, and there will be no further difficulties for my consumer in relation to their participation in this process,” said Tel Aviv law firm Shibolet’s lawyer Adi Zaltzman, wrote in the letter: “We are sure that , without delay, after the public delivery of the shares, my consumer will be the majority shareholder of El Al”.
These two characteristics of Rozenberg, the acquisition of a majority stake in El Al or the acquisition through the shareholding, would reduce the shares of the existing majority shareholder, Tamar Mozes Borovitz, who will likely struggle to retain the airline by buying more shares. .
This can lead to a bidding war between the two candidates, and perhaps others that may seem, which would be wonderful news for El Al and the Department of Finance. Before Rozenberg, the government feared that no customer would show up for sale. of stocks and that he should take from the airline to save him.
Under the direction of Mozes Borovitz, who is also vice president of the airline’s board of directors, El Al suffered maximum leverage and an inflated charge structure, and faced tough unions even before the COVID-19 strike, which made the company even more vulnerable. when the crisis devastated the airline industry.
A research report published in TheMarker magazine in June this year stated that Mozes Borovitz was guilty of a series of decisions and policies that undermined the airline, adding to allowing inflated wages for control and pilots, granting loose or reasonable passages to El Al’s circle of family members. Employees. Fix and exploit unprofitable roads.
A Mozes Borovitz spokesperson declined to comment on the article.
When the coronavirus hit, El Al first stopped flights to China and, since April, canceled all advertising flights, exhausting special and shipping flights. %, stopped investments and signed agreements for the sale and subsequent lease of 3 Boeing 737-800s. The company owes approximately $350 million to passengers whose flights were cancelled due to the pandemic.
Revenue for the time of year fell 74% to $152 million, and the company recorded a net loss of approximately $105 million for the quarter, compared to the net source of profits of $100,000 in the same quarter of 2019. for the year, profits fell 53 percent to $472 million from $1 billion in the first part of 2019, the company said. Net loss in the first part of 2020 was extended 344% to $244 million, after a net loss of $55 million in part in 2019.
Since Israel began its “open skies” policy with the United States (in 2010) and With Europe (in 2013), El Al has struggled to compete with the low-cost charter airlines that have landed on its territory. In 2019, one hundred airlines operated scheduled and charter flights at Ben-Gurion Airport.
In 2019, El Al carried 5. 9 million passengers, or 24. 6% of airport traffic. Since 2017, El Al has lost market share on all its routes – Europe, transatlantic flights and Asia and Africa – from 28. 4% in 2018 to 24. 6% in 2019, according to the company’s 2019 monetary report.
The company increased its losses by 14% to $60 million in 2019, revenues increased to $2. 2 billion from $2. 14 billion in 2018. The biggest corporate expenses are distant wages, to 27% of overhead costs, and fuel, to 26%.
El Al is also a highly indebted company, which means it finances its operations through debt than one hundred percent of the funds held; in fact, its debt ratio, used to assess a company’s leverage, was around 1300% at the end of 2019. The average ratio for other airlines is approximately 50%, according to a specialized estimate.
In addition to increased competition, El Al is paralyzed by other local factors; its domestic market is small, so it does not gain advantages in its size; and will pay high security costs, even if the government covers 97. 5%, making sure it is one of the safest in the world, after witnessing a wave of terrorist attacks and aircraft hijackings over the past century.
With the fate of El Al likely to be decided in the coming days, the features seem less stellar. Existing owners were suffering before he hit the pandemic. A potential long-term owner is young and inexperienced. The government is proposing a bailout, yet it doesn’t need to renationalize.
Some experts consulted for this article have privately warned that the maximum rational option for the company is bankruptcy, which would allow the sale of assets and the eventual creation of a new El Al, even with the same name, but without the luggage that entails. He’s weighed it.
But again, no Israeli would need to see the country’s flagship airline without a watch.