Brenmiller Energy (TASE: BRNG) is bringing in Rani Zim (TASE: RANI) in as a partner to obtain NIS 47 million in loans for development of the Rotem 1 power station.
Brenmiller's share price responded to the agreement with a 31% leap yesterday on a trading turnover of several hundred million shekels to nearly NIS 4.50. Despite this gain, the company's share has lost over 70% of its value since Brenmiller's IPO in August 2017, pushing its market cap down to less than NIS 70 million.
Brenmiller reported that it has signed an agreement for two loans from Rani Zim: NIS 12 million for financing regular operations and NIS 35 million in order to complete the Rotem 1 project. The loans, which are index-linked and bear 5% annual interest, are due for repayment 18 months after the determining date.
Avi Brenmiller can convert the debt into shares
On the date on which the deal, which is subject to a several conditions, a joint control agreement between Rani Zim and Brenmiller founder, controlling shareholder, CEO, and chairman Avi Brenmiller will come into effect. Starting on that date, Brenmiller can convert NIS 3.5 million in owners' loans and the company's salary debt to him into shares at NIS 3.50 per share.
Brenmiller develops, designs, builds and operates electricity production facilities, and sells energy equipment and storage solutions, based on proprietary development and technology. Its main project, Rotem 1, is for building and operating a power station combining solar energy and natural gas. Rotem 1, located in the Rotem industrial park near Dimona, will be sold to Israel Electric Corporation.
The parties also agreed that they would take steps to establish a joint company for developing energy, energy storage, and other projects in Israel in which Rani Zim will hold a 51% stake. Rotem 2 will be assigned to this company. According to Brenmiller's most recent financial statements, construction of Rotem 2, located next to Rotem 1, will begin this year. The investment in it is expected to total NIS 87 million, and annual revenue from it is estimated at NIS 18 million.
The larger of the two loans will be provided according to milestones set forth in the agreement of principles. Brenmiller's rights in Rotem 1, including future proceeds, will be attached to secure this loan. Subject to the necessary approvals, Rani Zim can convert all or part of this loan to up to 100% of the shares in Rotem 1, relative to the amount of the loan provided up until that time, and will be entitled to increase the amount of the loan at any time for the purpose of repaying the project's debt to Bank Leumi, the funding bank.
Beginning of Rotem 1 operation scheduled for this year
According to the figure reported by the companies, Rotem 1 will have a 1.7-megawatt capacity, and annual revenue from it is projected to amount to NIS 6 million. Brenmiller estimates the investment in the project at NIS 65 million, and says that the plant will begin operating this year.
The smaller loan for regular activity will be provide to Brenmiller in the four NIS 3 million instalments. It is convertible into shares in Brenmiller at NIS 3.80 per share, or at NIS 2.70 per share subject to the conditions set forth in the agreement of principles, depending on another financing agreement of Brenmiller. In order to guarantee repayment, Brenmiller will grant a senior lien on a number of his shares in the company to be agreed later.
Rani Zim, which develops, builds, and manages shopping centers, has a NIS 570 million market cap, after its share price climbed 130% in the past year. A presentation published by Rani Zim early this year for an offering of shares and a bond issue amounting to tens of millions of shekels each (already completed) stated that in addition to the company's income-producing real estate activity, it had recently begun accelerated developed of photovoltaic energy activity.
Last Thursday, sources said that Rani Zim was joining the trend of non-banking credit companies, whose shares have been booming for a prolonged period, by acquiring a controlling interest in PLT Finances. Rani Zim is carrying out this transaction through private company Rani Zim Holdings. The deal will put it in direct competition with Adi Zim, Rani Zim's brother, the controlling shareholder in SR Accord, one of the leading non-banking credit companies listed on the TASE.
Published by Globes, Israel business news - en.globes.co.il - on February 10, 2020
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