The well-publicized sale of the state's rights in Road 6 (the Cross-Israel Highway) is getting underway. The Accountant General's Office, through Cross-Israel Highway Company Authority, will begin the road show among institutional investors in the capital market, in order to receive bids for the acquisition of the government's rights to Road 6 franchisee Derech Eretz Highways (1997) Ltd.
Last week, "Globes" reported that a new infrastructures and energy fund, Noi, set up by Poalim Capital Markets - Investment Bank Ltd. and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), plans to bid for the state's rights in Road 6. The state's rights to the toll road have been previously valued at NIS 450-550 million.
The government is selling the state's rights to 49% of the project, plus the right to receive additional interim debt. The sale will be made in a competitive process, in which the bidders will bid to buy participation certifications to these rights. Derech Eretz has a 30-day right of first refusal to the government's offer to sell.
In view of the capital market's great interest in infrastructure projects, especially projects in which leading capital market companies are already involved, the government expects that the sale will attract great interest, which is already seen in the large number of institutional investors who have asked the government to participate in the road show.
The Cross-Israel Highway toll road (also known as the Yitzhak Rabin Highway) runs 104 kilometers from Ein Tut Interchange in the north to the Soreq Interchange in the south. It has ten interchanges. Derech Eretz built and operates the road as a BOT (build, operate, transfer) project. Construction began in 2002 and the franchise period expires in 2029. Derech Eretz is held in equal shares by Israel Infrastructure Fund (IIF) and Shikun u'Binui Holdings Ltd. (TASE: SKBN).
Published by Globes [online], Israel business news - www.globes-online.com - on February 7, 2011
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