The first stage of what could be the biggest ever securities offering on the Tel Aviv Stock Exchange was completed on Wednesday as Tamar Petroleum – a newly formed entity to buy Delek Group’s stake in the Tamar gas field – raised $650 million from sale of bonds.
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The sale of dollar bonds met with huge demand from institutional investors, which put in orders for as much as 4.3 billion shekels ($1.2 billion) of the bonds. The debt, rated A1 by Midroog, is for 6.2 years and will carry a coupon of 4.7%, 100 basis points under the maximum set in the prospectus.
The strong appetite for the bond was unusual as there wasn’t quite wall-to-wall support for the terms. The shareholder advisory form Entropy supported as did shareholders of Delek Drilling, the Delek Group unit spinning off the Tamar stake, but Psagot Investment House and several private investors did not.
In any case, the public tranche of the offering will take place on Thursday and is expected to raises another several tens of millions of dollars. Two weeks from now, Tamar Petroleum will then turn to the capital market to raise between $400 million and $450 million in an initial public offering at a company valuation of $1.1 billion.
The proceeds will enable Tamar petroleum to buy a 9.25% stake in the gas field from Delek Drilling. Delek, which is under government orders to divests its entire 31.25% Tamar holding by the end of 2021, will profit handsomely from the the sale.
From the sale of its 9.25% stake to Tamar Petroleum Delek Drilling said it expects to post a $740 million pre-tax gain. That is because the stake in now listed on its books at its cost, which is $444 million. It will be paid out to shareholder – chief among them Yitzhak Tshuva’s Delek Group – as a dividend.