Gov't okays NIS 120m. emergency loan for Israel Military Industries

Govt okays NIS 120m. em

IMI 248.88 (photo credit: Israeli Military Industries)
IMI 248.88
(photo credit: Israeli Military Industries)
The cabinet on Sunday approved Finance Minister Yuval Steinitz's request for a NIS 120 million emergency loan to pay salaries at state-owned Israel Military Industries Ltd., which is slated for privatization. Speaking at the cabinet meeting, Steinitz and Defense Minister Ehud Barak promised that the emergency injection of funds will be the last loan the government will have to grant, and that within 60 days a solution for the privatization and continued financing of the company will have to be found. The ministers pointed out that the Defense Ministry had already transferred an advance of NIS 300m. and warned that funds could no longer be streamed directly into IMI without government approval and a comprehensive recovery plan. Last month, an agreement was reached between Barak, Steinitz and Histadrut chairman Ofer Eini in an effort to avert a crisis at IMI. Under the terms of the agreement, IMI received NIS 60m. to pay its October salaries. The remaining NIS 60m. approved on Sunday will be transferred within the next 20 days. The government has put Doron Cohen, director of the Government Companies Authority, in charge of overseeing the formulation of the privatization process within 60 days. In 2005, the government approved a plan to move forward with the sale of the state-owned company, which has been in a deteriorating financial state throughout the last decade. Israel has propped the company up with more than NIS 10 billion in aid and loan guarantees over the past 10 years. "The outline for the privatization process set out in 2005 is not realistic and thus an agreement has to be reached on a new outline, together with the workers and the Defense Ministry, which will be in line with and protect the security interests of the government in the company," said Cohen. One of the options being discussed for the initial stage of the privatization is to issue a public offering for 49 percent of IMI, and then to turn it into a privately owned company.