Four years after establishing the Sugat power plant in Kiryat Gat, Moti Ben-Moshe, the controlling owner of Dor Alon, sells it to OPC. Calcalist has learned that the energy company OPC is purchasing the station for NIS 535 million.
The station company has a debt of about NIS 320 million, so the gross consideration in the transaction is about NIS 855 million. The cash flow in the transaction is expected to be NIS 600-550 million, since Dor Alon is expected to receive cash balances and additional consideration until the transaction is completed in the first quarter of 2023.
The buyer is OPC Israel, the subsidiary (80%) of OPC Energy, which is controlled by Idan Ofer through Canon. The company, in which 20% is also a partner (20%) of Veidis, which is controlled by Gil Agmon through Delek Car, coordinates OPC’s energy activities in Israel. In February this year, OPC announced the establishment of a new subsidiary with Veridis, which will concentrate OPC’s energy activities in Israel. OPC also has operations in the United States through CPV, a subsidiary (70%).
Veridis raised NIS 425 million and its share (20%) in Rotem (OPC Rotem and AJS Rotem) in exchange for 20% of the new company’s shares. The value of Rotem companies was estimated at NIS 4.5 billion and the value of the merged company at NIS 6.6 billion. OPC owns 80% of the merged company, for which it is the first deal since its inception. The merged company is also working to build a 396-megawatt power plant near the company junction.
The Sugat power plant is the first deal Ben-Moshe signed with the acquisition of control of the Blue Square Alon Group in 2017. Dor Alon invested NIS 140 million in the station, some in the initial investment and some in the acquisition of its partners, who held 45% of the power plant’s shares in 2019.
Dor Alon reports published this week will evaluate the station with a valuation attached to them of NIS 715 million. The price in the transaction is at least NIS 120 million higher than the value of the station in Dor Alon’s books.
The construction of the station, which operates using the cogeneration method (electricity and heat production) and with a capacity of 73 megawatts, was made possible thanks to a financial closure for financing of NIS 435 million led by Mizrahi-Tefahot Bank, of which the aforementioned NIS 320 million remained. Dor Alon Energy, which is currently managed by Oded Golan, held 55% of the station’s shares upon its establishment. Sigma-Masad Partnership, managed by Amit Masad, held 45%.
The station was established in 2009. The electricity and steam produced in it were designed to be used by Sugat’s sugar plant, but were actually sold to the electricity grid. This was after Sugat decided to permanently cease operations of the refinery, and the contract with the power plant did not materialize.
As a replacement for a contract with Sugat, Dor Alon signed a new agreement with Dorad in 2019, for the sale of the power plant’s full power generation capacity. Under the agreement, Dorad acts as a power supplier, and is responsible for all activities related to the supply and sale of electricity of the power plant to end customers and the electricity company.
The station, which operates with combined cycle technology, is powered by natural gas from the Tamar reservoir. In 2019, Dor Alon acquired the share of its partners Sigma Epsilon and Masad Oz (45%) at a value of NIS 140 million per station, so this is a significant flood of value in the last three years for Dor Alon.
This is a relatively high price for the station whether to cut according to valuations made to stations in the market in recent years. Sugat speaks of a gross value of NIS 855 million (including debt). For comparison, transactions made in the market in recent years include the sale of HHI stations at a price of NIS 1.9 billion to a 600-megawatt station. .
OPC Private Energy, which is considered the largest company in the country in the field of energy, will try to improve the power plant with the help of its synergy with other stations.
Dor Alon operates 217 gas stations throughout the country in the field of gasoline; In the field of retail, it operates the municipal am: pm chain, Super Alonit and more; And in the field of real estate, the company has about 22,000 square meters of income-producing properties and 140,000 square meters in the construction stages. The latter include the Aloni Yam project, the Kfar Saba Aloni project and the Sgola Aloni.
The sale of the power plant is expected to improve Dor Alon’s financial position and increase the company’s cash balances. Upon completion of the transaction, the company’s net financial obligation is expected to decrease from NIS 1.7 billion to NIS 700 million. This return may also improve with the company’s bond rating, which currently stands at A3 on a “stable” horizon from the rating company Midroog.
This week, Dor Alon published its financial results for the first quarter of 2022. The company reported a 24% increase in net profit to NIS 51 million in the quarter, compared to a net profit of NIS 41 million in the first quarter of 2021.
Following the rise in world fuel prices, the Group’s net sales in the first quarter climbed to NIS 1.52 billion, compared with net sales of NIS 970 million in the corresponding quarter last year. The company’s equity amounted to NIS 1.35 billion, after distributing a NIS 50 million dividend in April.