Delek begins Tamar selloff with $650m bond offering

Tamar

Delek Drilling is spinning off a 9.25% stake to new company Tamar Petroleum in order to divest from Tamar.

Delek Group Ltd. (TASE: DLEKG) unit Delek Drilling LP (TASE: DEDR.L) is offering a $650 million bond on the Tel Aviv Stock Exchange (TASE) today in Tamar Petroleum. The new company is a special purpose vehicle (SPV) set up so that Delek can sell its 31.3% stake in Tamar, as required by the Israeli government in order to introduce competition into Israel's natural gas market. In two weeks, providing today's bond offering is successful, Tamar Petroleum will offer shares to the public and complete the sale of the first 9.25% in Tamar. Overall, Tamar Petroleum will be the largest ever offering on the TASE.

The $650 million bond offering today will be at a maximum interest of 5.7% and market sources expect the final interest rate to be between 4.7% and 5.3%. The bond issued today will ensure a lien on the full 9.25% stake of Tamar. The bond itself will cover 60% of the 9.25% stake with the remaining 40% being sold in shares worth about $450 million to the public in two weeks. The bond has an A1 rating.

Noble Energy Inc. (NYSE: NBL) needs to reduce its stake to 25% from 36% as part of the antitrust arrangements with the Israeli government and has already sold 3% of Tamar to Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) last year, reflecting a value of $12.3 billion for the entire field. This give the current offering of 9.25% of Tamar a value just above $1.1 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on July 5, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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