Edeltech in talks to buy 50% of Hagit power plant from Shikun & Binui
Ori Edelsburg's energy company could increase its stake in the 660-megawatt plant to 75%, as Generation Capital prepares to acquire Shikun & Binui Energy in a NIS 4.45 billion transaction.
Energy company Edeltech, controlled by Ori Edelsburg, is in preliminary talks to acquire 50% of the Hagit power plant from Shikun & Binui Energy, Calcalist has learned.
The stake is estimated to be worth approximately NIS 1 billion, or about NIS 800 million after debt. Edeltech currently owns 25% of the Hagit power plant, located near the Elyakim Junction, which has a generation capacity of approximately 660 megawatts.
If completed, the transaction would increase Edeltech's stake in the plant to 75%. The remaining shares are held by Keystone Infrastructure Fund, with 16%, and Menora Mivtachim, with 9%.
Menora Mivtachim may also seek to participate in the transaction, claiming it has a right to do so if one of the plant's shareholders sells its stake. Under that arrangement, Menora could acquire half of the shares being sold, or 25% of the plant.
The shares held by Shikun & Binui Energy are part of a broader agreement to sell the company to Generation Capital's infrastructure investment vehicle. The transaction, valued at NIS 4.45 billion, was signed but has not yet been completed.
Shikun & Binui, the parent company of Shikun & Binui Energy, chose Generation's offer over a competing bid from Keystone, which valued the company at NIS 4.35 billion.
Edeltech is expected to finance the potential acquisition using proceeds from a NIS 2 billion investment by Leumi Partners in the company. Half of that amount is expected to be distributed to Edelsburg, while the other half will be injected into Edeltech.
Edeltech declined to comment.
At the same time, Calcalist has learned that Edeltech is negotiating with Shikun & Binui over the construction of the Sorek power plant, a project estimated to cost more than $1 billion. Edeltech prefers an offer from Solel Boneh, Shikun & Binui's construction subsidiary, which is worth tens of millions of dollars, over lower-cost bids from Chinese companies.
The negotiations over Hagit are taking place as Generation Capital prepares to acquire Shikun & Binui Energy and merge it into PowerGen, the power-generation company controlled by Generation.
Generation is considering various changes to its power-plant portfolio as part of the transaction. The negotiations over the sale of Shikun & Binui Energy's stake in Hagit are linked to Generation's need to secure approval from the Electricity Authority and the Competition Authority for the broader transaction.
Obtaining those approvals presents challenges, and Generation has developed several possible solutions, including the sale of a plot of land at the Hagit site.
As part of those preparations, approximately two weeks ago Generation completed a share-exchange transaction with Rapac Energy. Generation transferred its stake in the Alon Tavor power plant to Rapac in exchange for Rapac's stake in the Reindeer power plant in the Sharon region.
Generation owns 52% of the Reindeer plant, which has a generation capacity of 865 megawatts. It has also secured an option to sell the stake to its partner, Nofar Energy, if the Electricity Authority requires such a divestment as a condition for approving the merger.
The structure of the broader deal between Generation and Shikun & Binui, signed approximately two weeks ago, was revised during negotiations following the signing of a memorandum of understanding in May.
The original agreement called for a base payment of NIS 4.05 billion, an additional NIS 150 million covering the period until signing as an interest component, and a conditional payment of NIS 300 million tied to the advancement of projects over the following five years.
During the final negotiations, the conditional component was converted into an upfront payment. Generation will therefore pay Shikun & Binui NIS 4.3 billion for the business, plus NIS 150 million in interest.
The transaction is being structured as a reverse triangular merger, under which PowerGen establishes a special-purpose company that merges with Shikun & Binui Energy. The structure is intended to preserve existing generation licenses, electricity agreements and financing contracts.
Following the merger, PowerGen is expected to more than double in scale. The acquired company owns gas-fired power plants, solar installations, storage systems and solar-thermal energy assets, as well as projects in Europe and the United States.
The combined company's total portfolio will amount to approximately 6.3 gigawatts, including 3.2 gigawatts of operational and income-producing assets.
