Navitas Petroleum raises NIS 400m bond

Gideon Tadmor  photo: Uria Tadmor

Gideon Tadmor's company will pay 8% effective interest on the bonds.

Navitas Petroleum yesterday completed the stage of its bond issue for financial institutions. The company ensured bond sales of NIS 400 million at an effective interest rate of 8%. Navitas Petroleum plans to raise tens of millions of shekels more in the public stage of the issue, scheduled for Thursday.

A week and a half ago, Navitas Petroleum was forced to halt its bond issue because of weak demand. Sources inform "Globes" that on Monday, the company raised the interest rate on the bonds from 6.5% to 7.75%, reflecting an effective interest rate of over 8% for participants in the institutional stage, including a preliminary participation fee and twice-annual interest. Furthermore, the company has greatly altered the deed of trust for the bonds, particularly by adding the condition that the bond proceeds will not be transferred from the trustee to the Navitas Petroleum until a substantial investment is actually needed (and not when the investment decision is made).

The company took these two measures following recent criticism in the bond market from financial institutions, the main points of which were the absence of adequate compensation for the risk in the issue (the interest rate) and a demand for a better deed of trust, in the hope of making the issue a success. There are several more changes, including one in the deed of trust stating that Navitas Petroleum's equity funds will be used to complete development of the Buckskin oil discovery in the Gulf of Mexico before the debt raised in the bond issue is paid to the company. After the bond issue is completed, Navitas Petroleum is expected to make a $15 million equity offering through participation units at a value of $100 million for the deal.

Navitas Petroleum, controlled by former Avner Oil and Gas LP (TASE: AVNR.L) CEO and Delek Drilling Limited Partnership (TASE: DEDR.L) chairman Gideon Tadmor, Chanan Reichman, Kobi Katz, and Hanan Wolf, engages in oil and gas exploration, development, and production, mainly in the US. The bond issue is for the purpose of financing exploratory drillings and development this year and next. One of Navitas Petroleum's main assets is rights in the Buckskin oil discovery, with 486 million barrels of oil, the development of which is the main object of the bond issue.

Tadmor headed the gas exploration partnerships in Yitzhak Tshuva's Delek Group Ltd. (TASE: DLEKG) at the time of the large-scale gas discoveries at Yam Tethys, Tamar, and Leviathan.

In addition to being a veteran of the Israel oil and gas industry, Tadmor is also one of the highest-paid employees in Israel. He has accumulated considerable wealth, mainly by exercising options in various Delek Group companies, amounting to hundreds of millions of shekels, in addition to tens of millions of shekels in salary.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 12, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Gideon Tadmor  photo: Uria Tadmor
Gideon Tadmor photo: Uria Tadmor
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