Shikun & Binui Holdings Ltd. (TASE: SKBN), a real estate and infrastructure group controlled by Shari Arison, is seeking to sell most of its holdings in the Carmel Tunnels franchise and Northern Routes projects through an auction. Sources inform "Globes" that Shikun & Binui had recently contacted important capital market investment institutions in order to attract their interest in buying participation units in a limited partnership that will hold 45% of the shares in Carmelton, which operates the Carmel Tunnels project in Haifa and 50% of Northern Routes.
Shikun & Binui expects to receive bids in the auction reflecting a NIS 600-700 million value for the limited partnership. Shikun & Binui expects the investors to be financial institutions, while Shikun & Binui will manage the partnership as a general partner, based on an estimated value of NIS 1.4 billion for all of Carmelton and NIS 165 million for all of Northern Routes. Shikun & Binui is managing the sale with help from consultants Nir Epstein and Amir Chechik. At this stage, the auction does not include Shikun & Binui's holdings in the desalination project in Hadera (50% - a partnership with IDE Technologies Ltd.), which is likely to be added to the limited partnership in the future.
Shikun & Binui has set a November 2 deadline for bids in the auction (no minimum price has been set). The auction is attractive for financial institutions (depending on the price to be determined), because it involves cash flow projects with no construction risk.
Shikun & Binui currently owns Carmelton in equal shares with Allied Holdings. Carmelton holds a franchise to manage, build, and operate the Carmel Tunnels project, including collecting tolls from users during the franchise period, which expires in 2040. The project reverts to the state with no compensation at the end of the franchise period.
Carmelton, which has a NIS 127 million equity deficit, is financed with NIS 173 million in owners' loans. Shikun & Binui's 2016 financial statements show that Carmelton, which began to report revenue in 2011, posted a NIS 13.4 million loss last year, following a NIS 17.6 million loss in 2015 and large losses in previous years.
Another Shikun & Binui holding slated for transferal to the planned partnership is 50% of Northern Routes (Shikun & Binui's total stake in the company is 60%). Northern Routes has a franchise to reconstruct, operate, and maintain a road network in northern Israel. It obtained the franchise from an agreement with Netivei Israel - National Transport Infrastructure Company. This agreement is valid until 2030.
Shikun & Binui recently sold 40% of the project at a NIS 65 million profit. Northern Routes finished 2016 with a NIS 2 million net profit.
Shikun & Binui is one of Israel's leading construction and infrastructure companies, with a NIS 3.4 billion market cap. The company recently announced the resignation of CEO Yaron Karisi and the appointment of Yuval Dagim in his place. The group recently become embroiled in a struggle for control of ADO Group Ltd. (TASE: ADO), which deals in real estate in Germany. The struggle ended with an agreement for joint control with foreign investment fund Apollo Global Management and the Dayan family. Shikun & Binui controlling shareholder Shari Arison recently signed an agreement for the sale of 49% of her holdings in Bank Hapoalim (TASE: POLI) to a group of US investors.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 22, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017