Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva, plans to acquire 100% of the shares of subsidiary Delek Energy Systems Ltd. (TASE: DLEN), of which it currently owns 87%. Delek Group has published an offer to purchase the remaining 13% of the company. The size of the deal, if implemented, on the basis of Thursday's closing price for the shares and participation units, is NIS 1.3 billion.
After publication of the offer to purchase, Delek Group's gas exploration units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) published clarifications to several paragraphs in Delek Group's prospectus for the offer to purchase. Paragraph 9.7.30 (F), entitled "Targets and business strategy - exports", states, "The partnership is examining various possibilities for natural gas exports via pipelines to Jordan, and/or Turkey, and/or Egypt, and/or the Palestinian Authority, and it is in contact with various parties on this matter."
This is an announcement of huge political and economic significance, contemplating the transport of gas via pipeline to Turkey, and from there to Europe at a lower cost than building a liquefied natural gas (LNG) facility for gas from the Leviathan field.
As for the offer to purchase, it is based on the closing prices of the shares and participation units on Thursday, August 1: NIS 1,900 for Delek Energy shares; NIS 2.698 for Avner's participation units; and NIS 15.66 for Delek Drilling's participation units.
Delek Group says that the consideration for the offer to purchase will allow Delek Energy's shareholders to continue to benefit from their rights to receive royalties, because after the proposed offer to purchase is completed, if it is successful, a new company will be established, which will receive all of Delek Group and Delek Energy's royalties from Delek Drilling.
Delek Group adds that the eligibility for royalties is for all Delek Drilling's current and future oil and gas rights, including the Cypriot Block 12 discovery. Each Delek Energy shareholder will receive shares in Delek Royalties (2012) Ltd. in a way that will exactly preserve in Delek Royalties the indirect holdings, and rights to royalties that it had through Delek Energy.
The payment will include a cash payment of NIS 71 per share, and Delek Group will also offer each shareholder a loan to finance the tax payment in the amount of 10% of the payment. The loan will be a two-year non-recourse dollar loan bearing an annual interest rate of 1%. The loan's only collateral will be the participation units exchanged under the offer to purchase. The shareholders will have the right to repay the loan early.
In addition, for each share exchanged under the offer to purchase, the Delek Energy shareholder accepting the offer will receive 324 participation units in Avner, 48 participation units in Delek Drilling, and one share in Delek Royalties. The offer is subject to 95% of the public shareholders in Delek Energy accepting the offer. If the threshold is not reached, the offer will be withdrawn, no Delek Royalties shares will be issued, and no Delek Energy shares will be purchase.
Delek Group says that the offer to purchase is necessary to "flatten the pyramid", and because of the low trading volume in Delek Energy's shares. "The strategic focus of the company in gas in the Mediterranean renders the existence of Delek Energy redundant, as it no longer has any activity apart from the holdings in the partnerships," it adds.
Published by Globes [online], Israel business news - www.globes-online.com - on August 6, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013