SINGAPORE, Oct. 12, 2020 /PRNewswire/ -- Kenon Holdings
Ltd.'s (NYSE: KEN, TASE: KEN) ("Kenon") subsidiary OPC
Energy Ltd. ("OPC") announced the execution of an agreement
by CPV Group LP (the "Buyer"), an entity in which OPC holds
a 70% stake, for the acquisition of Competitive Power Ventures
group ("CPV") from Global Infrastructure Management, LLC
(the "Seller"). CPV is engaged in the development,
construction and management of renewable energy and conventional
energy (natural gas-fired) power plants in the United States.
Consideration for the acquisition is $630
million (payable in cash), subject to post-closing
adjustments based on closing date cash, working capital and debt.
Additionally, an amount in the range of $54 million to $95
million is payable by the Buyer in respect of CPV's equity
in the Three Rivers project, which is currently under construction,
which may be paid at the Buyer's option in cash or a vendor loan at
terms that have been agreed between the parties.
The acquisition of CPV will be conducted through the acquisition
by CPV Group LP of 100% of the equity interests of three companies
(CPV Power Holdings LP, Competitive Power Ventures Inc. and CPV
Renewable Energy Company Inc.), which hold CPV's interests in
companies with plants in operation as well as development projects
and CPV's management company.
The acquisition agreement includes representations and
warranties and covenants by the parties, including covenants
regulating the conduct of the CPV business between signing and
closing. The Seller's representations will generally expire at
closing, other than certain fundamental representations which will
survive for two years. The Buyer has obtained a representation
and warranty insurance policy in connection with the acquisition
agreement with international insurers with a liability cap of up to
$52 million for a period ranging from
three to six years, depending on the particular representation and
warranty.
The acquisition is subject to closing conditions including
receipt of regulatory approvals and clearances, including from the
Committee on Foreign Investment in the
United States (CFIUS); the Hart-Scott-Rodino Act (HSR);
approval of the Federal Energy Regulatory Commission; and approval
of the New York Public Service Commission. OPC believes that the
process of receiving all the requisite regulatory approvals and
clearances may take up to six months.
The acquisition may be terminated if closing conditions are not
met within 180 days of the date of the agreement, which period may
be extended by an additional 60 days if regulatory approvals are
not obtained by the 180-day deadline. The agreement provides for a
termination payment of $50 million
(plus certain expenses of the Seller) by the Buyer if the agreement
is terminated as a result of certain breaches of representations or
covenants by the Buyer which result in a failure of closing
conditions to be met or in the event that all conditions to closing
are met and the Buyer fails to complete the transaction. The
termination fee obligation is guaranteed by OPC. The right of the
Buyer to pursue the termination fee does not prevent the Seller
from seeking specific performance of the agreement in circumstances
provided in the agreement.
On October 9, 2020, OPC signed a
partnership agreement with three institutional investors in
connection with the formation of OPC Power (the
"Partnership") and acquisition of CPV by the Partnership.
OPC is the general partner and will own 70% of the Partnership
interests. The remaining Partnership interests are owned by
institutional investors relating to the following entities: Clal
Insurance Enterprise Holdings Ltd. Group (12.75% interest), Migdal
Insurance and Financial Holdings Ltd. Group (12.75% interest) and
Poalim Capital Markets (4.5% interest). The total investment
obligations of all the limited partners amount to $815 million, based on their respective ownership
interests, representing obligations for acquisition consideration
as well as funding of additional investments in the Buyer and in
CPV for implementation of certain new projects being developed by
CPV.
The general partner of the Partnership, an entity owned by OPC,
will manage the ownership of CPV, with certain material actions (or
which may involve a conflict of interest between the general
partner and the limited partners) requiring approval of a majority
or special majority (according to the specific action) of the
institutional investors which are limited partners.
The general partner is entitled to management fees and success
fees subject to meeting certain achievements. There are limits on
transfers of partnership interests, tag along rights for the
institutional investors, drag along rights for OPC, and OPC has a
right of first offer (ROFO) in the case of transfers by the
institutional investors, and all limited partners have a ROFO in
the case of certain additional fundraising by the
partnership. OPC has entered into put and call arrangements
with one of the limited partners exercisable after 10 years in
certain circumstances.
More information on CPV and OPC's plans for financing its
portion of the acquisition consideration and developments costs for
projects in development is included in Kenon's Report on Form 6-K
furnished on September 29, 2020.
Caution Concerning Forward-Looking Statements
This Report on Form 6-K, including the exhibits hereto,
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
include, but are not limited to, statements relating to the
agreement to acquire CPV, including the terms of the transaction,
representations and warranty insurance, financing sources,
statements relating to the partnership that owns the buyer of CPV
including funding requirements and expected funding requirements
for development projects and other non-historical matters. These
statements are based on current expectations or beliefs and are
subject to uncertainty and changes in circumstances. These
forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond Kenon's control, which
could cause the actual results to differ materially from those
indicated in such forward-looking statements. Such risks include
risks relating to the acquisition, financing for the acquisition,
risks relating to the partnership agreement and arrangements with
limited partners, the risk that required approvals and clearances
are not received within the deadlines in the agreement or any
conditions imposed in respect of such approvals, risks relating the
CPV business, including risks relating to US federal and state
policies and regulations connected to the markets in which CPV
operates and changes in market dynamics, risks relating to CPV's
projects under construction, including potential delays in
receiving required permits, a change in the construction costs,
delays in the construction, changes in the provisions of law, an
increase in the financing expenses, and unforeseen expenses or
other unforeseen risk, financing risks and risks relating to
potential changes in the US renewable energy market and
expectations and other risks described in Kenon's Report on Form
6-K furnished to the Securities and Exchange Commission on
September 29, 202 under the heading
"Special (main) risk factors involved in CPV's activities," and
those risks set forth under the heading "Risk Factors" in Kenon's
Annual Report on Form 20-F filed with the SEC and other filings.
Except as required by law, Kenon undertakes no obligation to update
these forward-looking statements, whether as a result of new
information, future events, or otherwise.
Contact Info:
Kenon Holdings Ltd.
Jonathan Fisch
Director, Investor Relation
jonathanf@kenon-holdings.com
Tel: +44 20 7659 4186
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SOURCE Kenon Holdings Ltd.