Planning and project services company Tahal Group International BV has signed another substantial contract. Tahal, managed by president and CEO Saar Bracha, today announced that it had won two projects for planning and constructing water systems in Nirsa in the Indian state of Jharkhand. The projects total $76 million (NIS 270 million). Tahal controlling shareholder Kardan NV (TASE: KRNV;AEX:KARD) is planning to sell Tahal in order to meeting its huge obligations to its bondholders.
The projects are for surveying, planning, and construction work on a water treatment and supply system for 127,000 households. The projects are in two stages. The planning and construction will take three years, and the operation and maintenance will take another five years. The price for the first project is $27 million, $7 million of which is for the second stage. The second project is priced at $49 million, including $4 million for the second stage. Tahal says that the agreements for the two projects are slated for signing in the coming weeks, "and Tahal expects to begin work on the project immediately afterwards."
Tahal has signed projects in India totaling $170 million over the past two years. This is the fifth project that the company has won in India, and the third of this type in Jharkhand.
Most of Tahal's activity focuses on developing, planning, implementing, and operating water infrastructure, agricultural development, gas and environmental projects in over 20 countries. The current announcement comes less than a month after the company reported signing huge deals in long-term projects in Africa: development and construction of three agricultural development projects in Angola for a combined total of $290 million (over NIS 1 billion) and an agreement for planning and constructing an agricultural and water project in Zambia estimated at NIS 640 million ($176 million). The proceeds from these deals will be shared equally by Tahal and ZRB, its partner in Africa.
Kardan's NIS 1.3 bond debt
Kardan NV's share, which features very volatile trading, jumped 11% today, pushing the company's market cap up to NIS 75 million. In the past three years, however, the company has lost 60% of its value. Kardan has been actively trying to sell Tahal in recent months in order to meet its huge obligations to its bondholders. The company reported in June that at least two Chinese companies had made binding purchase offers for Tahal at prices of at least €120 million. Kardan NV has to replay its entire NIS 1.3 billion debt to its bondholders, including principal and interest, in February 2018-February 2020. The company's previous debt arrangement with the bondholders stipulated that the proceeds from the sale of each of the company's assets would be used immediately for early repayment of the debt, and the exact amount that will actually be paid depends on the interest accumulated by the time the debt is repaid. Kardan NV currently carries a going concern warning, due to uncertainty about its ability to fully meet its obligations on time. The company's management is currently engaged mostly in finding ways to repay the debt.
Published by Globes [online], Israel Business News - www.globes-online.com - on September 13, 2017
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