Paz Oil (TASE: PZOL) has announced a deal whereby 15% of the shares in Ashdod Oil Refinery will be allocated to Shapir Engineering and Industry (TASE: SPEN) at a post-money valuation of NIS 1.45 billion, at the same time as the distribution of 80.1% of the shares in Ashdod Oil Refinery as a dividend to Paz Oil shareholders. On the date of completion of the deal, Paz Oil will spin off Ashdod Oil Refinery and list it for trading on the Tel Aviv Stock Exchange .
Shapir will inject NIS 247 million into Ashdod Oil Refinery in exchange for the share allocation.
Ashdod Oil Refinery will repay its entire NIS 1.4 billion debt to Paz Oil through refinancing by the banks and financial institutions. After the deal is completed and the spin off, Paz Oil’s net debt will fall by NIS 1.0-1.2 billion to NIS 3.0-3.2 billion, and its financing expense will fall by NIS 50-70 million annually. The company will remain with a 4.9% holding in Ashdod Oil Refinery. Shapir Engineering and Industry will have five-year options to inject further capital into Ashdod Oil Refinery and raise its holding to 65%. The deal is subject to regulatory approvals and to preconditions.
Paz will continue to buy most of its fuels from Ashdod Oil Refinery and will maintain current prices.
Paz Oil says that it will continue to act in accordance with its strategic plan to focus on it score business of retailing in fuel, gas, electricity and food and convenience stores.
Paz group CEO Nir Sztern said, "This move is another significant step in the implementation of the Paz group’s strategic plan, following which the investors will receive two strong companies, each focused on its core business. Paz will become a focused company, with stable profitability and an efficient balance sheet, without the effect of the volatility in the profitability of the oil refinery. The oil refinery will complete its transformation into an independent energy supplier able to realize the potential that lies in its business assets."
Published by Globes, Israel business news - en.globes.co.il - on November 10, 2022.
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