In a blow to Dalia Energy Companies Ltd. (TASE: DALIA), Taavura, which held 25% of the consortium that won the auction for the purchase of the Eshkol power station from Israel Electric Corporation (IEC) with a NIS 12.4 billion bid, has decided to withdraw from the consortium, leaving Dalia Energy with the difficult task of raising the money to finance the purchase.
On Thursday, with the announcement that Dalia Energy-Taavura had won the auction, the clock started on the fourteen-day period allowed to the winner under the terms of the auction to deposit a NIS 200 million index-linked guarantee. This replaces the NIS 100 million deposit given to IEC as a condition for participating in the auction. In other words, the winner has to find a further NIS 100 million.
In its notification to the Tel Aviv Stock Exchange this morning, Dalia Energy stated that no final decision had yet been made on whether to go ahead with the deal, especially in the light of the possible consequences for the raising of finance of the wide gap between its bid and that of the under-bidder, OPC Energy (TASE: OPCE). It also stated that it would enter into negotiations with Taavura on the way in which Taavura will be involved, whether through an investment in Dalia Energy or in some other way.
Dalia Energy and Taavura’s NIS 12.4 billion bid for the Eshkol power station was 43% higher than the NIS 7 billion bid by OPC Energy.
When the results of the auction were announced on Thursday, the share price of Meshek Energy (TASE: MSKE), which holds 40.7% of Dalia Energy Companies, fell 17%, apparently because of investors’ doubts about the ability to finance the purchase. It eventually closed 15% down. OPC’s share price rose 3% on the news, and closed up 2.5%.
The Eshkol power station is the largest in Israel fueled by natural gas, with an installed capacity of 1,693 megawatts, about 15% of total power production in Israel. It has two modern combined cycle plants, and four older plants that are due to be shut down within a few years. The site covers 440 dunams (110 acres) of privately-owned land, sufficient for considerable development, including construction of the planned 850 megawatt Eshkol 2 power plant and extensive energy storage capacity.
Published by Globes, Israel business news - en.globes.co.il - on June 18, 2023.
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