Power stations company IC Power yesterday filed a draft prospectus with the US Securities and Exchange Commission (SEC) for an IPO on the New York Stock Exchange (NYSE).

The prospectus revealed that IC Power’s OPC private power plant at Mishor Rotem in the Negev has made a net profit of $95 million since it began operating in 2013, while Israel Electric Corp. has been running at a loss.

The company has not yet finally determined the exact company value for the offering. For the purpose of calculating the registration fees, the company listed a maximum sum of $100 million to be raised, which does not indicate the extent of the offering.

IC Power, one of the better investments by Israel Corporation (TASE: ILCO), produces electricity and operates power states in Latin America and Israel. The company has 16 power stations in South and Central America, most prominently in Peru, and one power station, OPC, in Mishor Rotem in the Negev.

The company produces a total of 2,642 megawatts of electricity, and its production capacity is projected to expand by a further 1,202 megawatts by the end of 2016. Since its founding in 2007, the company has invested $2.4 billion in building and acquiring power stations using natural gas, coal, diesel fuel, hydroelectric power, and wind energy. 92% of the electricity produced is sold to local power companies under long-term contracts. As of the end of 2014, the company’s existing contracts still had an average of 11 years to run.

IC Power finished 2014 with a $236 million net profit on $1.37 billion in revenue. The company reported $395 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). In the first quarter of 2015, the company made a $15 million profit, 73% less than in the first quarter of 2015, on $322 million in revenue. As of the end of the first quarter, the company’s net debt was $1 billion, and its equity was $824 million, amounting to 21% of its assets.

The company will become Singaporean

In contrast to previous media reports, according to the prospectus submitted to the SEC, the IPO does not include an offer for sale by the controlling shareholders, holding company Kenon Holdings Ltd (TASE:KEN: NYSE: KEN-WI), which is controlled by Idan Ofer; shares are being sold by the issuing company. IC Power plans to use the proceeds from its IPO for general uses, development of environmentally friendly energy projects, and for the acquisition of assets and companies in electrical production.

According to the prospectus, however, a significant part of the proceeds is slated for transfer from IC Power to Kenon through repayment of a $220 million promissory note. The note will be issued to Kenon before the offering as part of the process of reincorporating IC Power and turning it from an Israeli company into a Singaporean company.

The prospectus indicates that Kenon recently established a subsidiary in Singapore called IC Power Pte, and it is this company that conducting an IPO in New York. For the offering, Kenon will transfer ownership of Israeli company IC Power to IC Power Pte in exchange for an allocation of shares and the issue of a promissory note to be paid later.

Kenon itself was founded only a year ago in Singapore in order to split off part of Israel Corporation’s business into a separate holding company. As part of this process, which was completed in early 2015, Israel Corporation transferred to Kenon its holdings in IC Power, Zim Integrated Shipping Services Ltd., Qoros, and Primus Green Energy, and later distributed to its shareholders all of its Kenon’s shares as a dividend in kind.

Kenon recently divested itself of its shares in Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), through a distribution of shares, also through a dividend in kind. Kenon’s current market cap is NIS 3 billion, mostly attributable to its holding in IC Power.

Published by Globes [online], Israel business news – www.globes-online.com – on September 1, 2015

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