Israeli banks among $430m Tamar exploration loan syndicate

Most of the loan will come from foreign banks, because of local banking restrictions.

Bank Leumi (TASE: LUMI), Israel Discount Bank (TASE: DSCT), and Mizrahi Tefahot Bank (TASE:MZTF) will participate in a bridge loan for Delek Group Ltd. (TASE: DLEKG) and Dor Gas Exploration Ltd. to develop the Tamar natural gas reservoir. Sources inform ''Globes'' that the $430 million loan will be divided as follows: foreign banks HSBC Holdings plc (LSE: HSBA; HKSE: 005; NYSE, Paris: HBC) and Barclays Bank plc (LSE: BARC) will each lend $150 million, and the Israeli banks will lend the balance. Mizrahi Tefahot Bank will lend $40 million, Discount Bank $35 million, and Bank Leumi will lend $25 million.

The reason that Bank Hapoalim (TASE: POLI) is not part of the syndicate, and that Bank Leumi's share of the loan is fairly small, is the borrower group restriction on Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva.

In June, Delek subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L), and Dor Gas signed a short-term financing agreement to develop the Tamar field. The non-recourse loan bears LIBOR + 4% for 18 months, with an option for a 12-month extension. Avner and Delek Drilling's share of the loan is $380 million, and Dor Gas's share is $50 million. The financing makes it possible to defer raising the main part of the financing for the project by 18 months, on the assumption that it will then be possible to obtain the main financing for the project in conditions of greater certainty and lower financing costs.

Development of the Tamar field will cost $3 billion. The cost will be divided among the field's partners on the basis of their shares in the license rights. Noble Energy Inc. (NYSE: NBL) owns 36% of Tamar, Avner and Delek Drilling each own 15.625%, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) owns 28.7%, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Gas owns 4%.

Published by Globes [online], Israel business news - www.globes-online.com - on October 17, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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