Trading in the share of Kenon Holdings Ltd. (TASE: KEN: NYSE: KEN), controlled by Idan Ofer, was halted following the company's announcement of an agreement to sell 12%, half of its remaining stake, of Chinese auto venture Qoros for $227 million. Kenon sold a 51% controlling interest in the venture to Chinese Baoneng Group exactly one year ago. The current deal is a separate one with Baoeng that is unrelated to the put option granted to Kenon under the previous agreement. Trading in Kenon's share was subsequently resumed, with the share price rising sharply on the news.
The deal, which leaves Kenon with a 12% stake in Quros, while Baoeng holds 63% and Chery Automobile owns 25%, is subject to various approvals in China, including regulatory approval.
Baoneng, a holding company controlled by billionaire Yao Zhenhua, the fourth wealthiest man in China, injected 6.6 billion yuan ($1 billion) for an allocation of 51% of the share capital in Qoros, and received a three-year option to buy Kenon's remaining stake for 3.1 billion yuan.
In addition to its capital injection into Qoros, Baoeng repaid the owners' loans of $145 million each to Qoros by its founders, Kenon and Chery. The deal reflected a $650 million value for Kenon's stake in Qoros.
Kenon and Israel Corporation (TASE: ILCO), from which Kenon was split off four years ago, invested $850 million in Qoros, almost all of which was written off in their previous reports. At the time of the deal, Qoros was listed in Kenon's books at a value of less than $100 million.
Baoeng, based in Shenzhen, China, was founded in 1992. It currently controls 40 real estate, commercial, logistics, financing, educational, insurance, and health companies. In view of the accelerated development of the electric vehicles market in China, Baoeng plans to use Qoros as a platform for entering the industry.
Qoros initially developed and marketed cars with conventional engines, but switched to electric and hybrid cars in the Chinese and global markets after a number of unsuccessful years. The company accumulated nearly $1.6 billion in debt up until last year's deal, despite several attempts to its business change direction in recent years, new models, and entering new fields of business, such as the development, production, and marketing of an electric vehicle.
Shortly before the Qoros deal, Kenon completed a very successful sale of its power stations business in Latin America to the Squared Capital international infrastructure fund for $1.3 billion.
Now that the current deal has been completed, Kenon still has a 32% stake in Zim Navigation, 12% of Qoros, and a 75.8% share of OPC Energy Ltd. (TASE:OPCE), which has a NIS 2.9 billion market cap.
Kenon's share price responded to the deal with a 10% leap. The share price has climbed almost 60% in the past year, pushing its market cap up to NIS 3.5 billion.
Published by Globes, Israel business news - en.globes.co.il - on January 8, 2019
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