After IC Power's New York Stock Exchange (NYSE) IPO failed early this year, the company is now promoting an $80 million bond issue by its OPC subsidiary on the Tel Aviv Stock Exchange (TASE). IC Power is controlled by Kenon Holdings Ltd (TASE:KEN: NYSE: KEN-WI), Idan Ofer's holding company, which has a NIS 2.4 billion market cap. The non-marketable bonds, which have been rated A minus by S&P Maalot and A3 by Midroog, will apparently be issued in the next few days.
OPC, which operates in Mishor Rotem in the Negev, was Israel's first private power station. Kenon holds 80% of OPC's capital. The Oaktree Capital investment fund, controlled by US billionaire Howard Marks, is a minority shareholder. Most of the proceeds from the offering will be used to repay the loan that paid for building the power station, and the rest will be used to repay a capital note from parent company IC Power.
OPC wants to offer shares
After the bond issue is completed, OPC wants to offer its shares on the TASE, and it cannot be ruled out that this offering will take place in the current quarter, once the company's value for it is determined. A value of $350-400 million before money is estimated.
IC Power owns 17 power stations in 11 countries. The company tried to raise $310-390 million at a company value of $1.3-1.6 billion on the NYSE early this year, but demand by US investment institutions was light, and the offering was called off. Sources later said that Kenon was considering an offering by IC Power or OPC on the TASE, and the latter option has apparently been chosen.
According to Kenon's 2016 financial statements, OPC generated $356 million in revenue in 2016, 9% more than in 2015, and its net profit was up 9% to $24 million. OPC's adjusted EBITDA for the year was $67 million, down 15%, in comparison with 2015.
OPC, which uses natural gas to produce 440 megawatts of electricity, provides power to 20 major business customers in Israel, including the Intel fab in Kiryat Gat and Haifa-based Oil Refineries Ltd. (TASE:ORL), controlled by Idan Ofer through Israel Corporation (TASE: ILCO) .
In 2015, through OCP, IC Power acquired a power station built by Hadera Paper Ltd. (TASE: AIP; Pink Sheets: HAIPF) near the latter's plant in Hadera for NIS 60 million. Last month, IC Power signed an agreement to acquire 95% of the rights in the Zomet Energy project for building a gas-powered power station at Zomet Plugot from Rapac Communication and Infrastructure Ltd. (TASE: RPAC) and its UK partner, Ipswich Holdings, for several million dollars.
Kenon gained control of IC Power in 2015 as part of a restructuring maneuver in the Ofer group companies. Oil Refineries and Israel Chemicals (TASE: ICL: NYSE: ICL) were retained by Israel Corporation, while IC Power, failing auto manufacturer Qoros, and Zim Integrated Shipping Services Ltd. were given to Kenon, which was founded in order to hold them.
Kenon announced in recent days that Guatemala-based IC Power subsidiary Energuete had raised $330 million in a bond issue at 5.95% annual interest. The debt will be repaid in two annual payments by 2027. Energuete also took a $120 million loan in order to repay a $120 million loan to IC Power.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 10, 2017
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