Kenon has announced today that IC Power has completed the acquisition of 100% of the shares of AIE. AIE holds a conditional license for the construction of a 120 MW cogeneration power station in Israel. The project is in the advanced development stage and construction is expected to commence in early 2016. AIE's power plant is expected to supply the electricity and steam needs of Hadera Paper's facility, as well as to provide electricity to end users in Israel. The power plant will operate using natural gas and diesel oil and is expected to have a relatively high level of energy utilization due to usage of the cogeneration technology, which supplies electricity and steam in a single production process.
In connection with the completion of the transaction, Hadera Paper has agreed to sell equipment that it uses to produce steam and electricity within its manufacturing plant to AIE on the earlier of (i) December 30, 2015 and (ii) the date AIE holds an electricity generation license for such equipment. Until that time, AIE shall lease such equipment from Hadera Paper.
The consideration for the transaction was NIS 60 million (approximately $16 million), of which approximately NIS 24 million (approximately $6 million) was in the form of a loan which will be converted into consideration (and considered a payment to Hadera Paper) upon completion of the sale of the aforementioned equipment to IC Power.
In connection with the completion of the transaction, Hadera Paper has assigned to AIE a gas supply agreement with the Tamar partners relating to the facility and the related gas transport agreement with Israel Natural Gas Lines Ltd. In addition, on June 8, 2015, AIE and Hadera Paper have entered into agreements for AIE's supply of electricity and steam from the AIE power plant to be constructed by IC Power to Hadera Paper's facility from closing and for a period of 18 years from the date the power plant commences operations. AIE will also lease from Hadera Paper the land on which the power generation plant is located for a period from closing and up to 20 years from the date of commercial operation of the plant.
Based off its initial assessment, IC Power expects that the cost of completing the AIE plant (including the consideration for the acquisition of AIE and the construction of the power station) will be approximately $200 million.
About IC Power
IC Power is a part of Kenon's group and is a global company that owns private power plants in 11 countries in Latin America and the Caribbean, as well as in Israel, with an aggregate installed (including pipeline) capacity of approximately 4,000 megawatt.
IC Power, through its subsidiary OPC Rotem, constructed and owns the first large-scale private power plant in Israel, with an installed capacity of 440 megawatt, and which operates in Mishor Rotem. The plant is a combined cycle power plant which operates on natural gas, and which has been in operation since July 2013, supplying discounted electricity primarily to private consumers.
Kenon is a newly-incorporated holding company that operates dynamic, primarily growth-oriented businesses. The companies it owns, in whole or in part, are at various stages of development, ranging from established, cash generating businesses to early stage development companies. Kenon's businesses consist of:
- IC Power Ltd. (100% interest) - a leading owner, developer and operator of power generation facilities in the Latin American, Caribbean and Israeli power generation markets;
- Qoros Automotive Co., Ltd. (50% interest) - a China-based automotive company;
- ZIM Integrated Shipping Services, Ltd. (32% interest) - an international shipping company; and
- Primus Green Energy, Inc. (91% interest) - an early stage developer of alternative fuel technology.
Kenon's primary focus is to grow and develop its primary businesses, IC Power and Qoros. Following the growth and development of its primary businesses, Kenon intends to provide its shareholders direct access to these businesses, when it believes it is in the best interests of its shareholders for it to do so based on factors specific to each business, market conditions and other relevant information. Kenon intends to support the development of its non-primary businesses, and to act to realize their value for its shareholders by distributing its interests in its non-primary businesses to its shareholders or selling its interests in its non-primary businesses, rationally and expeditiously.