Nakash Brothers Halt Capital Injection to Arkia, Diluting Employee Shares
Translated & summarized from Calcalist by baba
The Nakash brothers will not inject capital into Arkia Airlines, preventing the dilution of employee shares. The airline needs at least $40 million due to heavy losses, and employees had opposed the dilution plan. Several potential buyers have recently shown interest in acquiring Arkia.
The story in 5 lines · by baba
- Nakash brothers will not inject capital into Arkia, halting planned dilution of employee shares.
- Arkia faces insolvency without a $40 million capital injection due to significant losses.
- Employees had strongly opposed the dilution of their shares in the airline.
- Several potential buyers, including Rami Levy, have expressed interest in acquiring Arkia.
- The Toot Corporation decided not to declare a labor dispute following the board's decision.
The Nakash brothers have decided not to inject capital into Arkia Airlines at this time, meaning employee shares in the company will not be diluted. This decision was made during a board meeting attended by the Nakash brothers, who own 80% of the airline, and representatives of the Toot Corporation, which holds the remaining 20% for employees. The decision marks a departure from the original plan, which involved the Nakash brothers injecting tens of millions of dollars into the company, a move that would have diluted employee holdings.
Arkia is facing significant losses, estimated at over $30 million since the beginning of the year, and requires at least a $40 million capital injection to continue operating. The Nakash brothers had argued that without this investment, the company would face insolvency. They viewed the dilution of employee shares as a necessary price for the company's survival.
Employees strongly opposed the dilution, which would have further reduced their stake in the company, a situation they have experienced before when they lost 10% of their shares. They had threatened to declare a labor dispute and disrupt the airline's operations.
Following the board's decision, the Toot Corporation has decided not to declare a labor dispute at this stage. Meanwhile, several potential buyers have expressed interest in acquiring Arkia in the past week, including Rami Levy, who owns the competing airline Israir, the Israel Airports Authority Workers' Union, Yariv Lerner, the Varor family, and Avi Elkiaim. It appears the Nakash brothers have opted to explore other solutions rather than invest further funds themselves.
