El Al signed with Phoenix a non-binding agreement of principles according to which Phoenix will provide a loan

El Al, controlled by Kenny Rosenberg signed with Phoenix, which is managed by Eyal Ben Simon, a non-binding agreement of principles according to which Phoenix will provide a loan to the frequent flyer company, which is fully owned by El Al.
Under the agreement in principle, Phoenix will give the frequent flyer club a loan of up to $ 130 million, due in late December 2027. The terms of the final agreement will be determined between the parties in the detailed agreement, if signed, but as part of the agreement an interest rate % To 7%, depending on the adjustment mechanism to be determined in the detailed agreement.
Phoenix will also receive an allotment of options that can be exercised at any time for 25% of the frequent flyer's shares, by the end of December 2027. The loan repayment will be secured by a lien on the frequent flyer club's cash flow, and a lien on all the company's shares. '
The detailed agreement will set additional obligations and restrictions on the taking of additional debt by EL AL, financial criteria, grounds for immediate repayment, including immediate repayment of the loan that Phoenix will give to the Frequent Flyer Club, in case asked not to meet the repayment dates of the loans.
The non-binding agreement of principles between EL AL and Phoenix is ​​valid for 90 days, and if no detailed agreement is signed by the end of the period, the agreement in principle will be revoked - unless it is extended by one of the parties.
Completion of the negotiations and the signing of a detailed agreement between Phoenix and El Al will lead to the conclusion of negotiations between El Al and Bank Hapoalim, on the sale of 20% of the shares of the Frequent Flyer Club for $ 50 million, ie at a company value of $ 250 million
Formulation of a non-binding agreement of principles A binding agreement is likely to encounter difficult obstacles. El Al will be required to legally separate the company from the frequent flyer club company - and to formulate the commercial conditions that will prevail between the companies regarding the accumulation and conversion of points.
El Al's frequent flyer club has 2.38 million members, as of March 2022. The proportion of passengers at El Al who are members of the club out of all passengers, increased to 32% in 2021, after being only 26% in 2020. Under an agreement with the state amended at the end of February 2022, EL AL had to notify the Ministry of Finance by yesterday which route it chooses to fulfill its commitment to raise at least $ 100 million, against selling shares in the frequent flyer club, or receiving a loan guaranteed in cash and shares.