IDE to sell desalination plant if awarded new tender

Avshalom Felber Photo: Orit Tadmor
Avshalom Felber Photo: Orit Tadmor

Seven local and international groups are participating in the tender for a second desalination facility at Soreq.

Desalination engineering company IDE Technologies, owned in equal shares by Delek Group Ltd. (TASE: DLEKG) and ALPHA Partners, has contracted a nine-month put option for the sale of part or all of its holdings in the desalination facility in Ashkelon or the desalination facility in Sorek to Dan Capital, the investment arm of Dan Bus Company. The option is part of an agreement signed by IDE with the Concentration Committee and the Antitrust Authority director general to enable IDE to compete in the tender for building and operating the huge Sorek 2 desalination facility.

If IDE wins the Sorek 2 tender and exercises its option to sell its holdings in the existing desalination facility at Sorek, which it fully owns, it is expected to receive NIS 520 million. If it exercises its option to sell the Ashkelon desalination facility, of which it owns 50%, the price will be calculated "according to the principles of value set for the Soreq desalination facility." The existing facility at Soreq desalinates 150 million cubic meters a year, while the Ashkelon facility's capacity is 120 million cubic meters annually.

The deal with IDE is Dan Capital's second income-producing infrastructure project in a year, after it bought the desalination facility in Netanya from Electra Ltd. (TASE: ELTR) in an estimated NIS 100 million deal.

IDE specializes in the development, planning, production, and operation of desalination facilities and advanced water solutions. The company, which was founded over 50 years ago, has carried out over 400 projects in 40 countries, including Israel, India, China, Australia, and Thailand, as well as countries in Europe, North America, Latin America, and the Caribbean Islands. In addition to these holdings in the desalination facilities in Ashkelon and Sorek, the company also owns half of the desalination facility in Hadera (127 million cubic meters annually) and fully owns a desalination plant built in 2015 at Carlsbad, California.

Memorandum of understanding with Fortissimo

ALPHA Partners acquired the Israel Chemicals' (TASE: ICL: NYSE: ICL) stake in IDE last year for NIS 167 million. Shareholders in ALPHA Partners include Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) (20%), the advanced training funds of the teachers and kindergarten teachers, (20%); and IDE president and CEO Avshalom Felber (10%).

Two months ago, Delek Group signed a non-binding memorandum of understanding (MOU) with the Fortissimo fund, led by Yuval Cohen, for the sale of 60% of its Delek Infrastructures subsidiary, which holds half of the shares in IDE. The MOU is based on a company value of $206 million for Delek Infrastructures, reflecting a value of $412 million for IDE. At the same time, Delek Infrastructures and Fortissimo will take steps to raise $80-100 million in debt on the capital market or from the banks, which will be deducted from the value of Delek Infrastructures for purposes of the deal.

Seven local and international groups have entered the Sorek 2 tender, the results of which will be published in the coming months, so it is certainly possible that IDF will not win it, in which case the deal will not go through. The new Sorek 2 desalination facility, a joint project of the Ministry of Finance, the Ministry of National Infrastructure, Energy, and Water Resources, and the Israel Water Authority, is being carried out by the Public-Private Partnership (PPP) method, in which the developer selected will be responsible for designing, financing, building, operating, and maintaining the desalination facility for 25 years. The facility is planned to produce 200 million cubic meters of water annually, bringing total desalinated water production in Israel to 785 million cubic meters annually, amounting to 85% of Israel's total home and municipal consumption.

Published by Globes [online], Israel business news - - on October 8, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Avshalom Felber Photo: Orit Tadmor
Avshalom Felber Photo: Orit Tadmor
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