The state will charge NIS 600 million tax on the $1.1 billion sale of Delek Drilling Limited Partnership's (TASE: DEDR.L) rights in the Tamar natural gas reservoir. The rights are listed in Delek Drilling's books at only $400 million, meaning that the partnership will post a $700 million capital gain on the sale, slated to go ahead tomorrow. The 25% capital gains tax will therefore amount to NIS 600 million at the current exchange rate.
The tax revenue is significant, given the rise in the cumulative deficit over the past 12 months from 2.1% in the early months of the year to 2.4% in May. The deficit was affected by a fairly sharp downturn in revenues from indirect taxes in May, which were 11% less than in May 2016.
Delek Drilling is due to carry out the first stage in the sale of 9.25% of the rights in the reservoir to special purpose vehicle (SPV) Tamar Petroleum for $1.1 billion. The SPV, founded for the purpose of this deal, will raise $650 million tomorrow in a bond issue, and raise the rest of the amount needed to purchase the rights in a stock offering to the public two weeks from now.
The sales of Delek Drilling's rights in Tamar is required by the natural gas plan, in which Delek Group Ltd. (TASE: DLEKG) controlling shareholder Yitzhak Tshuva agreed to sell all of his holdings in Tamar by the end of 2021. Following the upcoming sale of rights, the first step in the implementation of the gas plan, Delek will be left with 22% of the rights in the reservoir. Noble Energy,the reservoir's operator and Delek's partner in its ownership, has undertaken to dilute its holdings in the reservoir from 36% to 25%.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 5, 2017
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