After encountering problems with a bond issue he led for the overseas oil and gas exploration and production group he heads, Gideon Tadmor yesterday also had trouble with the institutional auction for the offering of participation units of Navitas Petroleum. Navitas originally sought to raise NIS 50 million in an auction from undisclosed investors, but eventually managed to raise "only" NIS 32 million. The partnership is now hoping that the public auction will compensate for the shortfall. This amount raised includes the underwriters' participation, meaning that even the amount raised is deceptively high. The partners are nevertheless pinning their hopes on the public auction.
The Navitas Petroleum overseas exploration partnership, led by Tadmor, one of the leaders of the Israeli energy industry, and his partners, conducted a bond issue for the partners two months ago. In accordance with their already published plan, they are now following it up with an offering of 25% of the participation units for at least NIS 53.4 million ($15 million), reflecting a minimum value of over NIS 213 million, before money, for the partnership. It appears that the results of the institutional stage of the auction, the primary stage, reflected a value of $55 million for the partnership. Meitav Gemel, Safra, and Menorah Mivtachim Holdings Ltd. (TASE: MORA) are believed to have made the largest orders.
An informed source said that there was less disappointment with the institutional auction than the final figure would indicate, because demand for the offering had reached NIS 42 million, while the company had to reject NIS 10 million in demand "due to aspects relating to the public's holdings." This mainly consisted of partial filling of the order by Delek Group Ltd. (TASE: DLEKG).
Navitas revealed that $5.2 million of the amount raised was earmarked for repaying part of the loan granted to the partnership by Delek Group, and that the outstanding balance of the loan was $24.1 million, as of June 30, 2017. In addition, Tadmor provided a $6.3 million personal guarantee in the loan agreement, which will now be reduced to $3.5 million. With each repayment of the principal of the loan after November 2017, the guarantee will be reduced to 25% of the outstanding balance of the loan. $2.8 million more of the proceeds from the offering will go into a bank deposit designed to replace Tadmor's guarantee for the auction in Canada.
What else will be done with the money raised in the new offering? It will also be used to repay two bank loans, while the rest of the proceeds will be kept by the partnership for investment in its oil assets, which are regarded as relatively low-risk. The general partner is also putting $4 million into the offering, and investors in the private round are exercising options at the same time.
The Navitas partnership engages in oil and natural gas exploration, development, and production. Its activity focuses on worldwide exploration and searching for projects and development of existing licenses in the Gulf of Mexico, plus initial work in processing the information about these licenses. As of now, the partnership has rights in 12 projects, including 20 franchises for oil and gas drilling and exploration in the US, the Gulf of Mexico south of the shores of Texas and Louisiana, and on land in Louisiana. The partnership also has a sea exploration license in eastern Newfoundland.
Navitas says that the potential reserves and resources in the partnership's projects amount to 645 million barrels.
Published by Globes [online], Israel Business News - www.globes-online.com - on September 18, 2017
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