Delek to Sell Tamar Stake through Special Purpose Co

Delek Group, is set to sell its 31.25% holdings in Tamar Partnership through a special purpose company (SPC). The company plans to transfer all its Tamar holdings to the SPC and the go to an IPO in either New York or London. First details of Delek Group's plan to divest its holdings in Tamar were revealed this week by CEO Asaf Bartfeld during an analysts' call following the filing of the group's second quarter results.

According to the Regulatory Natural Gas Framework Delek has to sell off all its Tamar holdings within six years of the Framework's approval. Noble Energy, the biggest stake holder in Tamar with 36% and the operator, has to sell down to 25%. In July Noble concluded a deal to sell 3% of Tamar to Harel Group, one of Israel's biggest insurance group in a $369mn deal that values the project at $12.3bn, according to Noble. The deal has still be approved by the regulators but set the benchmark for Delek's sale.

Delek CEO Asaf Bartfeld

"We have a few options. As you know Noble has to divest 11% but we have to sell all our holdings in Tamar, so it's another story," Bartfeld said. "One of the plans that we are looking at is to establish a new legal entity, a partnership or a company, and take this company to the capital market.

"Most of the 28% [of Tamar] are pledged to the Tamar Bond, we have 3% free," he said referring to the $2bn bonds issue from two years ago which are secured against revenues from Tamar. Bertfeld said that Tamar was too big for the Israeli capital market to absorb it.

Bartfeld also referred to offtake agreements and said that company was negotiating with Union Fenosa Gas (UFG) and Shell but added that there is "nothing we can talk about." As for Jordan, he said that a deal with Jordan's Nepco, the Jordanian Electric Company, for an annual 3-4bn m³  PSA is "especially important for the development of Leviathan." However, he said that despite the deal's approval in the Jordanian Parliament, it is not a done deal yet. "The deal is not signed, we hope it will be signed very soon," Bertfeld said. "There are some issues. It is not something that I know and not telling you. Just I don’t know exactly."

According to an analyst who preferred to remain anonymous, the solution to the problem may pose a hurdle as ownership transfer normally means bondholders are entitled to demand an early repayment. 

Ya'acov Zalel