Housing and Construction: Ashelim solar project at risk

Ashelim power plant
Ashelim power plant

Abengoa, a partner in the project, has petitioned for a stay of proceedings in Spain.

Shikun & Binui Holdings Ltd. (TASE: SKBN) (formerly Housing and Construction) today notified the Tel Aviv Stock Exchange (TASE) that the huge project for building the first thermo-solar field in Israel at Ashelim in the Negev was at risk. Spanish company Abengoa, a partner in the project, has petitioned for a stay of proceedings in Spain, and is holding talks with its creditors.

Housing and Construction said that it was considering the possible consequences of these circumstances, and the legal and operational alternatives available to it. The Israeli company said, "The opening of Abengoa's bankruptcy proceedings initiated by the company, if they are opened, may constitute a breach of the agreements for financing the project signed by the franchise holder and the lenders of the senior debt for the project. This breach gives the senior debt lenders the right to immediately collect the balance of the debt for the project (currently at $35m, H.C.). In addition, bankruptcy can itself be considered a breach between the construction contractor and the operation contractor."

Housing and Construction asserts that the company has prepared a shelf plan, and has contacted several international contractors, mainly Spanish ones. It is possible that Housing and Construction will decide to continue the project by itself. The company is also trying to advance the timetable by three months in order to obtain the accompanying bonus.

Together with European Investment Bank (EIB) and eight other financial entities, Bank Hapoalim (TASE: POLI) has already granted a bank loan for the project. The other financing banks include Israel Discount Bank (TASE: DSCT), First International Bank of Israel (TASE: FTIN), Mizrahi Tefahot Bank (TASE:MZTF), and Union Bank of Israel (TASE: UNON), as well as financialinstitutions Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), Menorah Mivtachim Holdings Ltd. (TASE: MORA), Psagot Investment House Ltd., and The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), which closed financing with thermo-solar energy consortium Megalim Solar Power, owned by French company Alstom (25.05%), Brightsource Energy (25.05%), and Noy Infrastructure and Energy Investment Fund (49.9%).

The cost of building the solar field is estimated at NIS 2.9 billion. The financing for the project will total NIS 2.35 billion, with the rest being provided in equity by the shareholders. The developers were advised by Advocates Jonathan Finkelstone and Guy Kles from the Tadmor & Co. Yuval Levy & Co. law firm.

Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Ashelim power plant
Ashelim power plant
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