Notice of the Closing of a Transaction for the Sale of Participation Interests of 9.25% in the Tamar and Dalit Leases

July 24, 2017 at 9:51 AM EDT

Tel Aviv, July 24, 2017. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) announced that below an immediate report that was published by Delek Drilling Partnership Limited is provided advising on the closing of a transaction for the sale of participation
interests of 9.25% in the Tamar and Dalit Leases.

  1. Further to the Partnership’s immediate report of July 18, 2017, regarding fulfillment of a condition precedent in the sale agreement in which the Partnership engaged with Tamar Petroleum Ltd. (the “Company”) for the sale of participation interests at the rate of 9.25% (out of 100%) in the I/12 Tamar and I/13 Dalit leases (the “Tamar and Dalit Leases” and the “Sale Agreement”, respectively), the Partnership hereby respectfully announces that on July 20, 2017, all of the conditions precedent specified in the Sale Agreement were fulfilled, including receipt of the approval of the Petroleum Commissioner for the transfer of the interests in the Tamar and Dalit Leases and registration thereof in the Petroleum Register, and as a result the transaction contemplated in the Sale Agreement was closed, i.e.: the interests at the rate of 9.25% (out of 100%) in the Tamar and Dalit Leases were transferred against consideration in cash of approx. ILS 2,985 million (excluding the expenses entailed by the offering of the Company’s shares) which is expected to be received in full before commencement of the trade in the Company’s shares (the “Consideration in Cash”), and against the allotment of 19,990,000 ordinary shares of par value ILS 0.1 each of the Company (the “Consideration in Shares”).

  2. Out of the sum of the Consideration in Cash, the Partnership shall designate approx. U.S. $321 million for partial prepayment of four series of bonds (the 2018, 2020, 2023 and 2025 series) which were issued by Delek & Avner (Tamar Bond) Ltd., a wholly-owned subsidiary of the Partnership, which constitutes 20% of the total unpaid balance of each one of the bond series (i.e. $80 million in each one of the series), plus accrued interest in the sum total of approx. $1.1 million, all in accordance with the provisions of the indenture of the bonds. The date of performance of the partial prepayment will be July 27, 2017, while the persons who are entitled to the partial prepayment will be bondholders as of July 24, 2017.

    The trading in the Company’s shares on the Tel Aviv Stock Exchange is expected to commence on July 24, 2017.

  3. On July 20, 2017, a tax decision was received from the Tax Authority, determining, inter alia, the date of payment of the tax in respect of the Consideration in Shares, according to which, subject to the conditions and instructions set forth therein:

    1. With respect to the capital gains that the Partnership shall derive from the Consideration in Cash, the Partnership shall pay tax advances pursuant to law.

    2. The date of payment of the tax in respect of the capital gains deriving from the Consideration in Shares shall be deferred until the occurrence of one of the following (the “Deferred Tax”).
    3. (1) On the date of exercise of the Company’s shares, the Deferred Tax shall be paid in respect of the portion of the exercised shares out of the total shares held before the exercise; on the date on which the holding rate of the Partnership in the Company’s shares decreases to 5% or less, the full balance of the Deferred Tax shall be paid.

      (2) If a profit distribution is declared at the Partnership after August 1, 2017, at a scope which exceeds the amount of the capital gains from the sold interests, net of the tax paid in respect thereof, an amount equal to 25% of the amount of the distribution that was declared as aforesaid shall be paid out of the Deferred Tax, and no more than the balance of the Deferred Tax (a profit distribution which is declared before this date will not bring forward payment of the Deferred Tax).

      (3) When the Company distributes a dividend to its shareholders, Deferred Tax shall be paid in an amount equal to 25% of the amount of the dividend that is received by the Partnership and no more than the balance of the Deferred Tax that has not yet been paid.

    4. The Partnership shall be entitled to bring forward, at its sole discretion, the date of payment of the Deferred Tax.

    5. In order to enable the holders of the participation units to benefit from the tax deferral arrangement set forth in the tax decision, it was determined that in the tax certificates to be issued to the entitled holders in respect of the tax year, only the capital gains due and payable in the same tax year according to the tax decision, shall be reported. It was further agreed that the said capital gains, including the capital gains that shall be reported in the following years as a result of the sale of shares of the Company, shall be subject to the tax rates that apply in 2017. A holder may offset the said profit only against a loss incurred thereby up to and including the tax year 2017.

    The partners in the Tamar and Dalit Leases and their holding rates are as follows:

    Noble Energy Mediterranean Ltd. 32.50%
    Isramco Negev 2, Limited Partnership 28.75%
    Delek Drilling - Limited Partnership 22.00%
    Dor Gas Exploration – Limited Partnership 4.00%
    Everest Infrastructures – Limited Partnership 3.50%
    Tamar Petroleum Ltd. 9.25%

    This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on July 23, 2017.

    About The Delek Group

    Delek Group is an independent E&P and the pioneering visionary behind the development of the East Med. With eight consecutive finds in the Levant Basin, Delek is leading the region’s development into a major natural gas export hub. In addition, Delek has embarked on an international expansion with a focus on high-potential opportunities in the North Sea and North America. Delek Group is one of Israel’s largest and most prominent companies with a consistent track record of growth. Its shares are traded on the Tel Aviv Stock Exchange (TASE:DLEKG) and are part of the TA 35 Index.

    For more information on Delek Group please visit www.delek-group.com

    Contact

    Investors

    Dina Vince
    Head of Investor Relations
    Delek Group Ltd.
    Tel: +972 9 863 8444
    investor@delek-group.com

    Media

    Nilly Richman
    Head of Communications
    Delek Group Ltd.
    Tel : +972 9 863 8444
    media@delek-group.com