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Ata Appears Doomed

June 26, 1985
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Months of dogged efforts to save the bankrupt Ata textile mills and the nearly 2,000 jobs they provide ended today when the Ministerial Economic Committee voted for a second time to reject plans to sell the complex to a syndicate of American and Swiss investors.

The sale had been pushed strongly by Minister of Commerce and Industry Ariel Sharon and Moshe Shahal, the Minister of Energy and Infrastructure. They argued that the cost of shutting down the mills, including severance pay for its workers, would exceed the costs of keeping them running.

The agreement for sale, signed earlier this month by Sharon and the foreign principals, called for an investment of about $45 million in private capital. The government was to pay Ata’s creditors, notably the Bank Leumi and write off its own loans to the industry in return for an undertaking by the investors to operate the mills for at least 10 years and boost its exports.

But the economic ministers refused to ratify the sale on June 16 by a vote of 9-3, on grounds that the costs to the government were badly underestimated. Shahal and Sharon forced the full Cabinet to take up the issue at its regular weekly meeting Sunday, to no avail. The Cabinet referred the matter back to the Ministerial Economic Committee which upheld its earlier decision to reject the sale, this time by a vote of 8-2.

Ironically, the government which appointed a receiver for Ata after it defaulted on its debts last year, was eagerly seeking a private buyer to prevent mass unemployment in the Haifa area where Ata was the largest single employer. The latest deal, engineered by Sharon, seemed to be the most promising. But Treasury economists maintained that it placed too heavy a financial burden on the government and would set a bad precedent for other economically troubled enterprises.

The budget contains no provisions to save Ata. It will now be up to the Knesset Finance Committee to find the $9 million or more estimated to compensate the dismissed workers.

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