Press Releases
<< Back
Merger of Delek Group’s Partnerships - Fulfillment of Conditions Precedent and Closing Date
Download PDF Download PDF

Tel Aviv, May 17, 2017. Delek Group (TASE: DLEKG, US ADR: DGRLY) (“the Company”) presents below an Immediate Report published by the each of Avner Oil Exploration Limited Partnership and Delek Drilling Limited Partnership ("the Partnerships") regarding the fulfillment of all conditions precedeent and the closing the merger of Delek Group Partnerships.

Avner LP immediate report:
Following an immediate report dated December 12, 2016 regarding the convening of a meeting for approval of a merger of the Partnership with Delek Drilling – Limited Partnership (the "Merger Transaction" and "Delek Partnership", respectively), immediate report dated December 23, 2016 regarding the results of a meeting for approval of the Merger Transaction and the shelf offering report of the Delek Partnership dated December 12, 2016 and following a presentation released by the Partnership on May 14, 2017, the Partnership hereby respectfully announces the following:

  1. All of the conditions precedent for the closing of the Merger Transaction have been fulfilled, including the receipt of the approval of the Tax Authority (for further details see Annex A below) and receipt of the approval of the Petroleum Commissioner at the Ministry for National Infrastructures, Energy and Water according to the provisions of Sections 76 of the Petroleum Law, 5712-1952, and except for receipt of the approval of the Tel Aviv Stock Exchange Ltd. ("TASE") for listing for trade of the participation units which will be issued within the Merger Transaction by Delek Drilling Trusts Ltd. and receipt of the merger certificate from the Registrar of Partnerships.
  2. The conversion ratio which was determined in the Merger Transaction was not changed and will be 1:5:32, such that in exchange for 3,334,830,842 participation units of Avner Trusts Ltd. (the limited partner in the Partnership), 626,847,903 participation units will be issued (the "Issued Units") by Delek Drilling Trusts Ltd. (the limited partner in the Delek Partnership).
  3. Furthermore, on the Record Date (as defined below) Series A Bond series of the Partnership, which includes ILS 760,686,000 nominal value of bonds, of ILS 1 each, will be consolidated with Series A Bond series of the Delek Partnership, which includes ILS 767,847,000 nominal value of bonds, of ILS 1 each, such that both series will constitute one expanded series of Series A Bonds of the Delek Partnership, which will include ILS 1,528,533,000 nominal value of bonds, of ILS 1 each, identical in all of their conditions, after the fulfillment of the conditions stated in Section 7.1.5 of the Indenture, i.e.:
    1. The Delek Partnership has represented and confirmed to the Trustee for the Partnership’s Series A Bonds that the terms and conditions of the Series A Bonds of the Delek Partnership as of the date of consolidation of the series are identical to the terms and conditions of the Partnership’s Series A Bonds, including in terms of the payment schedule (with the adjustments required by the size of the series), the interest rate and all other terms and conditions of the Indenture;
    2. The consolidation of the series will not prejudice the rights of the holders under the Indenture (for this purpose it was clarified in the Indenture that any result deriving merely from the increase in the volume of the bond series following the series' consolidation will not be deemed as prejudice to the rights of the holders);
    3. The consolidation of the series has no tax consequences for the holders of the Partnership’s Series A Bonds. A confirmation in this regard received from the Tax Authority on May 11, 2017 is attached hereto as Annex B.
    4. All of the approvals required pursuant to any law shall be obtained, including the approval of TASE. Note that as of the release date of this report, TASE's approval has not been obtained yet.
    5. Note that Midroog Ltd., which rates Series A Bonds of the Partnership confirmed on May 15, 2017 that the Merger Transaction will not adversely affect the rating of the said bonds which is A1.il.

  4. The closing date (as defined in the agreement executed with respect to the Merger Transaction) which was coordinated with TASE, with the Registrar of Pledges and the Registrar of Partnerships, on which the Registrar of Partnerships is expected to issue a merger certificate, is May 17, 2017 (the "Closing Date"). On such date, the trade with the participation units which were issued by Avner Trusts Ltd. and the bonds issued by the Partnership will be stopped. The record date on which the holders of the participation units of Avner Trusts Ltd. will be entitled to the issued units, is expected to occur on May 18, 2017 (the "Record Date") and the date of commencement of trade with the Issued Units, is expected to occur on May 21, 2017 (the "Trade Commencement Date"). It is further noted that to the best of the Partnership's knowledge, Delek Partnership is simultaneously releasing an immediate report on the said matter.
  5. Forward-looking information notice: The aforesaid regarding the date of receipt of the merger certificate and/or the Record Date and/or the Trade Commencement Date is forward-looking information, as defined in the Securities Law, 5728-1968, and there is no certainty regarding their occurrence on the expected dates as aforesaid, including and inter alia, considering that they are not necessarily under the control of the Partnership and it is subject, inter alia, to actions which will be carried out by third parties, including the Registrar of Partnerships, the Registrar of Pledges, TASE etc.
    Insofar as any change shall occur with the said dates, the Partnership will notify through an immediate report regarding the new dates.


Annex A

The Tax Authority has provided its approval regarding the Merger Transaction, which includes, inter alia, the following details:

  1. That the details of the Merger Plan comply with the conditions specified in Sections 103C(1) and (7) of the Income Tax Ordinance (New Version), 5721-1961 (the "Ordinance") and that the merger will be carried out according to the provisions of Section 103A and 103B of the Ordinance and that the merger will be carried out with no tax liability according to the provisions of the calculation of the levy or oil profits, according to the Oil and Gas Profits Taxation Law.
  2. That the merger date will be on December 31, 2016 (the "Merger Date")
  3. The holders of the participation units will be subject to the provisions of Section 103F of the Ordinance and the Income Tax Regulations (Rules for Calculation of the Tax for Holding and Selling Participation Units in an Oil Exploration Partnership), 5749-1988, mutatis mutandis for the holding in the Partnership, such that there shall be tax continuity with respect to the unit cost.
  4. It was clarified that with respect to Section 103C(9) of the Ordinance, the rights of those who were controlling parties in the Delek Partnership prior to the merger will not be reduced from Effective Control (as defined in the approval), provided that they will be no less than 28.67% in each of the control means, directly and indirectly in the merged partnership. If the provisions of Section 103C of the Ordinance shall be violated, the partnerships and the controlling parties (directly and/or indirectly) therein, will submit to the Assessing Officer an expert valuation of the Transferring Partnership according to the Income Tax Rules (Application for Prior Approval for a Merger Plan), 5755-1995. In such case the Transferring Partnership in the merger and only the participation unit holders who are controlling parties as defined in Section 103C(8) of the Ordinance, will be charged with taxes and mandatory payments for which they received an exemption, plus interest and linkage differentials from the Merger Date until the date of payment, all in accordance with Section 103J of the Ordinance. Payment of the tax liability of the Transferring Partnership if any, will be paid by the controlling partner (Delek Group, Delek Energy and the general partner in the Partnership, each one according to its share).
  5. The assets being transferred to the Delek Partnership (the "Surviving Partnership") will be subject to the provisions of Section 103E of the Ordinance and they will not be attributed an additional sum above their original price, as was in the Partnership (the "Transferring Partnership") before the merger.
  6. It was further clarified that with respect to the deduction of withholding tax by the TASE members, the exchange of participation units in the Transferring Partnership for participation units in the Surviving Partnership, will not be taxed on the transfer date and tax continuity shall apply, such that for purposes of withholding tax upon the first sale after the Merger Date, the original price and the purchase date of participation units in the Transferring Partnership as the holder had prior to the merger, shall be deemed as the original price and the purchase date of participation units in the Surviving Partnership.

Annex B
Tax Authority’s Confirmation of the Consolidation of the Bond Series as Part of the Merger
[Available only in Hebrew]

Delek Drilling LP’s immediate report:
Following an immediate report dated December 12, 2016 regarding the convening of a meeting for approval of a merger of the Partnership with Avner Oil Exploration – Limited Partnership (the "Merger Transaction" and "Avner Partnership", respectively), immediate report dated December 23, 2016 regarding the results of a meeting for approval of the Merger Transaction and the shelf offering report of the Partnership dated December 12, 2016 and following a presentation released by the Partnership on May 14, 2017, the Partnership hereby respectfully announces the following:

  1. All of the conditions precedent for the closing of the Merger Transaction have been fulfilled, including the receipt of the approval of the Tax Authority (for further details see Annex A below) and receipt of the approval of the Petroleum Commissioner at the Ministry for National Infrastructures, Energy and Water according to the provisions of Sections 76 of the Petroleum Law, 5712-1952, and except for receipt of the approval of the Tel Aviv Stock Exchange Ltd. ("TASE") for listing for trade of the participation units which will be issued within the Merger Transaction by Delek Drilling Trusts Ltd. and receipt of the merger certificate from the Registrar of Partnerships.
  2. The conversion ratio which was determined in the Merger Transaction was not changed and will be 1:5:32, such that in exchange for 3,334,830,842 participation units of Avner Trusts Ltd. (the limited partner in Avner Partnership), 626,847,903 participation units will be issued (the "Issued Units") by Delek Drilling Trusts Ltd. (the limited partner in the Partnership).
  3. Furthermore, on the Record Date (as defined below) Series A Bond series of Avner Partnership, which includes ILS 760,686,000 nominal value of bonds, of ILS 1 each, will be consolidated with Series A Bond series of the Partnership, which includes ILS 767,847,000 nominal value of bonds, of ILS 1 each, such that both series will constitute one expanded series of Series A Bonds of the Partnership, which will include ILS 1,528,533,000 nominal value of bonds, of ILS 1 each, identical in all of their conditions, after the fulfillment of the conditions stated in Section 7.1.5 of the Indenture, i.e.:
    1. The consolidation of the series will not prejudice the rights of the holders under the Indenture (for this purpose it was clarified in the Indenture that any result deriving merely from the increase in the volume of the bond series following the series' consolidation will not be deemed as prejudice to the rights of the holders);
    2. All of the approvals required pursuant to any law shall be obtained, including the approval of TASE. Note that as of the release date of this report, TASE's approval has not been obtained yet.

    3. Note that Midroog Ltd., which rates Series A Bonds of the Partnership confirmed on May 15, 2017 that the Merger Transaction will not adversely affect the rating of the said bonds which is A1.il.

  4. The closing date (as defined in the agreement executed with respect to the Merger Transaction) which was coordinated with TASE, with the Registrar of Pledges and the Registrar of Partnerships, on which the Registrar of Partnerships is expected to issue a merger certificate, is May 17, 2017 (the "Closing Date"). On such date, the trade with the participation units which were issued by the limited partner in Avner and the bonds issued by Avner Partnership will be stopped. The record date on which the holders of the participation units of the limited partner in Avner will be entitled to the issued units, is expected to occur on May 18, 2017 (the "Record Date") and the date of commencement of trade with the Issued Units, is expected to occur on May 21, 2017 (the "Trade Commencement Date"). It is further noted that to the best of the Partnership's knowledge, Avner Partnership is simultaneously releasing an immediate report on the said matter.
  5. Forward-looking information notice: The aforesaid regarding the date of receipt of the merger certificate and/or the Record Date and/or the Trade Commencement Date is forward-looking information, as defined in the Securities Law, 5728-1968, and there is no certainty regarding their occurrence on the expected dates as aforesaid, including and inter alia, considering that they are not necessarily under the control of the Partnership and it is subject, inter alia, to actions which will be carried out by third parties, including the Registrar of Partnerships, the Registrar of Pledges, TASE etc.

    Insofar as any change shall occur with the said dates, the Partnership will notify through an immediate report regarding the new dates.


Annex A


The Tax Authority has provided its approval regarding the Merger Transaction, which includes, inter alia, the following details:
  1. That the details of the Merger Plan comply with the conditions specified in Sections 103C(1) and (7) of the Income Tax Ordinance (New Version), 5721-1961 (the "Ordinance") and that the merger will be carried out according to the provisions of Section 103A and 103B of the Ordinance and that the merger will be carried out with no tax liability according to the provisions of the calculation of the levy or oil profits, according to the Oil and Gas Profits Taxation Law.
  2. That the merger date will be on December 31, 2016 (the "Merger Date").
  3. The holders of the participation units will be subject to the provisions of Section 103F of the Ordinance and the Income Tax Regulations (Rules for Calculation of the Tax for Holding and Selling Participation Units in an Oil Exploration Partnership), 5749-1988, mutatis mutandis for the holding in the Partnership, such that there shall be tax continuity with respect to the unit cost.
  4. It was clarified that with respect to Section 103C(9) of the Ordinance, the rights of those who were controlling parties in the Partnership prior to the merger will not be reduced from Effective Control (as defined in the approval), provided that they will be no less than 28.67% in each of the control means, directly and indirectly in the merged partnership. If the provisions of Section 103C of the Ordinance shall be violated, the partnerships and the controlling parties (directly and/or indirectly) therein, will submit to the Assessing Officer an expert valuation of the Transferring Partnership according to the Income Tax Rules (Application for Prior Approval for a Merger Plan), 5755-1995. In such case the Transferring Partnership in the merger and only the participation unit holders who are controlling parties as defined in Section 103C(8) of the Ordinance, will be charged with taxes and mandatory payments for which they received an exemption, plus interest and linkage differentials from the Merger Date until the date of payment, all in accordance with Section 103J of the Ordinance. Payment of the tax liability of the Transferring Partnership if any, will be paid by the controlling partner (Delek Group, Delek Energy and the general partner in Avner Partnership, each one according to its share).
  5. The assets being transferred to the Partnership (the "Surviving Partnership") will be subject to the provisions of Section 103E of the Ordinance and they will not be attributed an additional sum above their original price, as was in Avner Partnership (the "Transferring Partnership") before the merger.
  6. It was further clarified that with respect to the deduction of withholding tax by the TASE members, the exchange of participation units in the Transferring Partnership for participation units in the Surviving Partnership, will not be taxed on the transfer date and tax continuity shall apply, such that for purposes of withholding tax upon the first sale after the Merger Date, the original price and the purchase date of participation units in the Transferring Partnership as the holder had prior to the merger, shall be deemed as the original price and the purchase date of participation units in the Surviving Partnership.

This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on May 16, 2017.

About The Delek Group

The Delek Group, Israel's dominant integrated energy company, is the pioneering leader of the natural gas exploration and production activities that are transforming the Eastern Mediterranean's Levant Basin into one of the energy industry's most promising emerging regions. Having discovered Tamar and Leviathan, two of the world's largest natural gas finds since 2000, Delek and its partners are now developing a balanced, world-class portfolio of exploration, development and production assets with total gross natural gas resources discovered since 2009 of approximately 40 TCF.

In addition, Delek Group has a number of assets in downstream energy, water desalination, and in the finance sector.

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

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

 

 

All contents © 2010 Copyright 2010 Delek Group. All rights reserved