Ampal-American Israel Corporation Expects to Receive Proceeds of Approximately U.S. $10 Million In Connection With the Sale by PSINet Europe of All of its Assets for U.S. $112 Million

Business Wire, August 25, 2004

NEW YORK -- Ampal-American Israel Corporation (NasdaqNM:AMPL) today announced that PSINet Europe, one of the holdings of Ampal's investee company, Telecom Partners, has sold all its U.K. assets for U.S. $90 million to Telstra Europe Limited. This transaction follows the recent sale by PSINet Europe of its Western European assets for U.S. $22 million to VIA NET.WORKS.

Telecom Partners holds approximately 30% of the interests of PSINet Europe. Ampal's investment in Telecom Partners consists of a EUR 4 million (approximately U.S. $5 million) convertible debenture, which converts into a one-third partnership interest in Telecom Partners, and a EUR 500,000 (approximately U.S. $ 600,000) loan. Ampal intends to convert its debenture in connection with this transaction.

In connection with these asset sales and upon a distribution of the proceeds by PSINet Europe to its shareholders, Telecom Partners is expected to receive proceeds of U.S. $30 million. Of such proceeds, Ampal is expected to receive approximately U.S. $10 million, most of which the company expects to receive during 2004, as a repayment of its loan and as a distribution from Telecom Partners upon the conversion of its debenture. As a result of the above mentioned transactions, Ampal expects to record a gain of approximately U.S. $6 million. A significant amount of such gain is expected to be recognized during 2004.

About Ampal

Ampal and its subsidiaries primarily acquire interests in businesses located in the State of Israel or that are Israel-related. Ampal has diversified interests in the following sectors: telecommunication, real estate, capital markets, leisure-time, high technology and other. For more information about Ampal please visit our web site at www.ampal.com.

About Telecom Partners

Telecom Partners serves as a platform for investments in the telecommunication industry, predominately outside of Israel. The other investors are Dirad and Infinity Holdings, both seasoned long- term investors focusing on restructured telecom assets. In addition to its holding in PSINet Europe, Telecom Partners currently holds an investment in Grapes Communications N.V./S.A, an Italian communication service provider to the small medium enterprises market.

About PSINet Europe

PSINet Europe is a European company that engages by means of fully owned subsidiaries in the supply of IP based communication services as well as managed hosting and managed security to some 10,000 corporate customers throughout Europe. The income of the company is about $ 100 million of which $ 60 million are in England and the balance in Continental Europe.

Certain information in this press release includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to the Company that are based on the beliefs of management of the Company as well as assumptions made by and information currently available to the management of the Company. When used in this press release, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," and similar expressions as they relate to the Company or the management of the Company, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events or future financial performance of the Company, the outcome of which is subject to certain risks and other factors which could cause actual results to differ materially from those anticipated by the forward-looking statements, including among others, the economic and political conditions in Israel, the Middle East, including the situation in Iraq, and the global business and economic conditions in the different sectors and markets where the Company's portfolio companies operate. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcome may vary from those described herein as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Please refer to the Company's annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially.