Israel Electric Corporation's (IEC) (TASE: ELEC.B22) board of directors today decided that the utility should consider an IPO in an attempt to increase its shareholders equity. The board also decided that the utility's development plan will be financed by the government, and that the utility will only be responsible for planning, implementation, and operation.
As an alternative, IEC's board proposes bringing in external partners to help finance the development plan in exchange for ownership stakes on the basis of their investments. IEC's development plan for the coming years totals NIS 8 billion, and includes the construction of new power stations and air pollution reduction projects. The board said that the decision to hold an IPO would only be considered "after progress on the abovementioned plans, and if conditions are suitable."
If IEC holds an IPO, it will be the first time since the utility was founded in 1923 that its shares will be offered to the public. The government owns 99% of IEC.
IEC's board today decided to adopt the recommendations of the World Bank to reduce its external debt. The decision means reducing its NIS 9 billion external debt within six years to reach the World Bank leverage target of 60%.
IEC's board also approved a NIS 4 billion debt raising framework for 2011, and to recycle debt to reduce the total debt by NIS 1.25 billion next year. The board said that it would approve each debt offering separately in advance.
Finally, IEC's board called on the Public Utilities Authority (Electricity) to immediately raise electricity rates by 16% in real terms, as recommended by the World Bank.
Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2010
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