Kenon Holdings Ltd. (NYSE: KEN; TASE: KEN), controlled by Idan Ofer, announced that it has agreed to fund up to $114 million to Chinese car manufacturer Qoros Automobile Co. Ltd. At the same time, Kenon announced the release of its remaining $125 million back-to-back guarantee obligations to its joint venture partner Chery Automobile Co. Ltd. The reduction in the back-to-back guarantees also releases commitments Kenon has to pay any related interest and fees to Chery under the guarantees.
In the first stage, Kenon has agreed to fund the provision of $57 million to Qoros while reducing by $63 million Kenon's back-to-back guarantee obligations to Chery, together with related interest and fees.
As part of the $57 million first loan to Qoros, Kenon will fund 50% of this amount on behalf of Chery in connection with 50% of the guarantee reduction discussed above and 50% of this amount on behalf of Kenon. Kenon will also pledge Qoros shares to Chery in connection with the remaining 50% of the guarantee reduction.
In addition, Kenon has agreed to fund a second loan of $57 million to Qoros on substantially similar terms (subject to the signing of additional agreements and certain other conditions) in connection with a further $63 million reduction in its back-to-back guarantees, which will completely release Kenon from all of its back-to-back guarantee obligations to Chery.
Since its establishment Qoros has lost a massive $1.5 billion although car sales jumped in 2016, giving some hope that the company will eventually move to profitability.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2017
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