El Al Airlines has signed a new agreement for state-assisted financing with the Israeli government.
The proposal includes a $210 million advance to the airline, El Al confirms in a Tel Aviv Stock Exchange filing.
Under the agreement, El Al says it is required to increase its share capital through a $105 million public offering, with controlling shareholder Eli Rozenberg to commit to buying $43 million of the shares and the remainder taken up by institutional investors.
The agreement follows failed negotiations with Bank Leumi and Bank Discount over a previous proposal to provide a $300 million bank loan to El Al with an 82.5% state guarantee, according to Globes newspaper.
Alongside this new agreement, El Al will implement a new efficiency plan to reduce costs by around $400 million between 2021 and 2025.
Airline management will take a 15% salary cut between 2022 and 2024 and a company-wide freeze on salaries will be implemented.
The Israeli flag carrier will also be prevented from declaring dividends until the end of 2025, while dividends distributed will not be able to exceed 30% of total net profit until after 2028.