Kardan mulls IPO for Tahal Group
Ariel Hasson Photo: PR
27 Feb, 2019 12:48
Negotiations to sell Kardan's subsidiary to a Chinese government company have apparently stalled.
Kardan NV (TASE: KRNV;AEX:KARD) has confirmed the report in "Globes" last Monday that an IPO is being considered for its Tahal Group subsidiary, if the company is not sold in the coming months. A report yesterday indicates that previously reported advanced negotiations to sell Tahal are making no progress.
Following Monday's report in "Globes" about what was said in a meeting of Kardan's bondholders, attended by CEO Ariel Hasson, the company published an official comment on the matter yesterday. The announcement said that the advanced negotiations to sell Tahal previously reported by the company had stalled, and the company was looking towards negotiations with other groups to sell its 98.43% holding in Tahal.
"In view of the stages in which the company's negotiations have reached and the uncertainty about whether they will be completed at all, combined with the timetables agreed with the bondholders' representatives, the possibility of including a clause in the arrangement with the bondholders was discussed. According to this clause, if the negotiations to sell Tahal are unsuccessful, then subject to the provisions of any law, including obtaining the necessary approvals and permits, the shares in Tahal will be distributed among the bondholders as repayment of the debt to them," Kardan stated.
"We emphasize that distribution of shares in Tahal is a possibility being considered by the parties, and that the company in any case is continuing its efforts to sell its Tahal shares. As of the date of the report, the terms and provisions for distributing Tahal shares to the bondholders have not yet been agreed, nor have the required approvals been obtained. In any case, there is no certainty that the arrangement brought before the bondholders' meeting for approval will include provisions for this matter," Kardan added.
Kardan plans infrastructure and manages infrastructure in water and agriculture. It conducted advanced negotiations in January 2018 for selling Tahal to Fortissimo for $120-130 million, but the deal was eventually called off, forcing Kardan to open negotiations with its bondholders for a second debt settlement.
"Globes" reported on Monday that at a meeting on Sunday, Hasson informed the bondholders that progress had been made in the negotiations to sell Tahal to a Chinese government company. He emphasized that the goal was to reach a higher degree of certainty by late June about the ability to go through with the deal. Another possibility was discussed at the meeting, in which Kardan's management would hold an IPO on the Tel Aviv Stock Exchange (TASE) for Tahal if negotiations with the Chinese companies do not advance as hoped.
Kardan's debt has a par value of NIS 405 million (holders of Series A bonds) and NIS 986 million (holders of Series B bonds). The second debt settlement reached with holders of the two bond series will be submitted to the court in Israel for approval in the coming weeks. According to the agreement, money received by Kardan from the sale of its assets will be used first to repay NIS 373 million in principal of the debt to holders of Series B bonds. It was further stipulated that the company will then repay NIS 10 million in the principal to holders of Series A bonds, after which debt from the two bond series will be repaid pari passu.
In mid-January, Kardan reported that it had signed an agreement to sell its 66% stake in Avis Ukraine to Universal Motors (UMI), its partner for $14.2 million. Kardan said at the time that the proceeds from the sale, together with its cash and other amounts to be received in the first quarter, would enable it to repay €38 million in debt when the new debt settlement with the bondholders goes into effect.
Published by Globes, Israel business news - en.globes.co.il - on February 27, 2019