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Cap/Com No. 100: Kickass! Workers buy their airline.
Arkia employees buy their company
By Zohar Blumenkrantz and Omri Cohen
Arkia Airlines' employees bought Knafaim's 75 percent stake in the carrier for $12 million yesterday. Since the union already owned 25 percent of the airline, the deal gives the workers 100 percent ownership.
Under the deal, the workers also received an option to buy Knafaim's shares in the travel agencies Issta and Kishrei Te'ufa, at a price to be determined by a mutually agreed assessor and subject to the consent of parties that hold the right of first refusal on the shares. Knafaim owns 25 percent of both companies.
Media reports have suggested that the workers coordinated the options deal with the New York based-Nakash brothers, who would then come in as strategic investors after the options were exercised.
The Arkia sale was mandated by Antitrust Commissioner Dror Strum after the Borovitch family, which owns Knafaim, purchased 39.6 percent of El Al from the state.
In a statement to the Tel Aviv Stock Exchange yesterday, Knafaim said that it believes that with the sale of Arkia and an option to buy Issta and Kishrei Te'ufa, coupled with the earlier sale of its 25 percent stake in another company, Arnon Paz, it believes that it has fulfilled all of Strum's conditions, and there is therefore no longer any need for him to appoint a trustee for Knafaim - a move he had threatened to take if Arkia were not sold.
"The sale to Arkia's workers reflects the relations of mutual trust between Knafaim's shareholders and Arkia's workers, which led to Arkia's growth, via mutual cooperation, over many years," said Israel Borovitch, CEO of Knafaim and chairman of the board of El Al, after the sale. "I wish Arkia's workers great success."
Meanwhile, Knafaim published its financial statements for 2004 yesterday. The company reported a 3.3 percent decline in revenues compared to 2003, from $174.9 million to $169.1 million. Nevertheless, it turned a profit of $1.46 million for the year, compared to a loss of $2 million in 2003.
In the fourth quarter, the company posted a loss of $2 million on revenues of $30.9 million.
By Zohar Blumenkrantz and Omri Cohen
Arkia Airlines' employees bought Knafaim's 75 percent stake in the carrier for $12 million yesterday. Since the union already owned 25 percent of the airline, the deal gives the workers 100 percent ownership.
Under the deal, the workers also received an option to buy Knafaim's shares in the travel agencies Issta and Kishrei Te'ufa, at a price to be determined by a mutually agreed assessor and subject to the consent of parties that hold the right of first refusal on the shares. Knafaim owns 25 percent of both companies.
Media reports have suggested that the workers coordinated the options deal with the New York based-Nakash brothers, who would then come in as strategic investors after the options were exercised.
The Arkia sale was mandated by Antitrust Commissioner Dror Strum after the Borovitch family, which owns Knafaim, purchased 39.6 percent of El Al from the state.
In a statement to the Tel Aviv Stock Exchange yesterday, Knafaim said that it believes that with the sale of Arkia and an option to buy Issta and Kishrei Te'ufa, coupled with the earlier sale of its 25 percent stake in another company, Arnon Paz, it believes that it has fulfilled all of Strum's conditions, and there is therefore no longer any need for him to appoint a trustee for Knafaim - a move he had threatened to take if Arkia were not sold.
"The sale to Arkia's workers reflects the relations of mutual trust between Knafaim's shareholders and Arkia's workers, which led to Arkia's growth, via mutual cooperation, over many years," said Israel Borovitch, CEO of Knafaim and chairman of the board of El Al, after the sale. "I wish Arkia's workers great success."
Meanwhile, Knafaim published its financial statements for 2004 yesterday. The company reported a 3.3 percent decline in revenues compared to 2003, from $174.9 million to $169.1 million. Nevertheless, it turned a profit of $1.46 million for the year, compared to a loss of $2 million in 2003.
In the fourth quarter, the company posted a loss of $2 million on revenues of $30.9 million.
This is great: the workers will now be the masters of their own faith.
Of course, this is just a reason to open a fresh new cap/com thread, and this time, the issue is worker-owned corporations: do we need much more of those around? Are they superior to ordinary corps?
Discuss!
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