Tel Aviv - Delek Group (TASE: DLEKG, US ADR: DGRLY) ('the Company') announced that a letter of request was sent to the trustees of the Company's debenture holders for a short extension of the date for the second capital raising set out in section 2.1.2 of the Company's Amended Deeds of trust ('the Amended Deed').
The Company was informed that the trustees of the debenture holders will convene a special consolidated meeting according to section 12 of the Amended Deed of trust to present and approve the provisions of the foregoing request.
The letter that was sent is set out below
For the reasons below, we wish to present a request to the special consolidated meeting of debentures holders (as set out in section 12 of the Amended Deed) for a short extension of the date for the capital raising prescribed in section 2.1.2 of the Amended Deed, so that it would be carried out by September 30, 2020 (instead of July 30, 2020), all according to the provisions below.
As we are aware, last Thursday, July 9, 2020, the Company announced that further to the capital raising of NIS 137 million carried out by the Company in May 2020, completion of the sale of the Company's rights to overriding royalties from Karish and Tanin for NIS 318 million and completion of the transaction of Delek The Israel Fuel Corporation Ltd. ('Delek Israel') for the sale of Pi Glilot for NIS 720 million, of which a dividend of NIS 150 million was distributed, the Company repaid NIS 450 million to the relevant banks (as defined in the Amended Deed), so that the debt to those banks decreased by over 50%, in accordance with the terms of the plan agreed with the relevant banks and the provisions of the Amended Deed.
This early repayment joins a long list of significant actions taken by the Company over the last three months, including repayment of almost a quarter of a billion shekels to debenture holders (principal and interest), another repayment of NIS 200 million to banks (beyond the sum repaid last Thursday, July 9, 2020), and distribution of a dividend from Ithaca of USD 20 million. Over the last three months, the Company and Delek Israel realized assets in an overall amount of NIS 1.8 billion.
These major actions together with other actions that the Company and Delek Drilling - Limited Partnership are currently promoting, including the sale of the Company's holdings in Delek Israel, secularization and/or sale of overriding royalties from Leviathan and the refinancing of Leviathan, are expected to generate additional cash flow in the forthcoming period (subject to their completion), in line with the Company's strategic plan and the cash flow forecast report it published as part of its financial statements.
As its external advisors have informed the Company, the current situation of the capital market, particularly on account of the economic crisis in the country and markets, and the general uncertainty, are highly likely to make it more difficult at this time, for the Company to succeed in raising significant capital at terms that will be beneficial to the Company. According to the provisions of the Deed, failure in fund raising will create grounds for the debenture holders to demand immediate repayment (and grounds for demand for immediate repayment by the banks), despite the significant and successful actions completed by the Company in recent months and the actions it intends to continue to advance and complete in the coming weeks.
It is better under the circumstances to give the Company the flexibility required for the capital raising, until September 30, 2020, instead of the provisions set out in the Amended Deed that require the raising to be carried out by July 30, 2020, and thereby avoiding the possibility, even if only theoretically, of unnecessary harm to the Company and its debenture holders, especially at a time when the Company is succeeding to complete significant, important actions in line with its strategic plan.
It should be noted that this is a short extension intended to provide the Company certain flexibility in determining the best date for execution of the issue, during which it will continue to progress a range of steps, each of which, if realized, will make a major contribution to the success of the fund raising, as compared with the situation in which capital raising at the present time is unlikely to achieve the desired result, with all the implications deriving from that.
Another important advantage in granting the extension is the controlling shareholder's notice to the Company of his intention to participate in the capital raising on the new date, in an amount of at least NIS 50 million, as opposed to the present provisions of the Deed, which have no such undertaking by the Company's controlling shareholder if the raising is carried out on July 30, 2020. The Company believes that this will significantly improve the chances of success of the raising compared a situation in which the fund raising at this time may not lead to the desired result, with all that this implies.
The above request does not change the other provisions of the Deed apart from amending the date, as set out above and below, and does not change the payment dates and repayment schedules.
Against this background and for the above reasons, on July 14, 2020 the Company's Board of Directors resolved to act to obtain a short agreed extension of the date for the fund raising stipulated in section 2.1.2, so that the capital raising set out in section 2.1.2 of the Amended Deed may be carried out by September 30, 2020 (instead of the present provision of the Amended Deed that requires carrying out the raising by July 30, 2020). As part of the request and subject to its approval, it was decided that the Company would undertake that the debenture holders will be eligible for additional interest at an annual rate of 0.4% for the period from the current date for execution of the capital raising under discussion (July 30, 2020) and the actual date of the raising (meaning, the additional interest on the principal of the debentures will be calculated for the period from July 31, 2020 until the actual date of receipt of the consideration of the issue by the Company, and no later than September 30, 2020). The proposed rate for the additional interest takes into account the short time of the requested extension (up to two months), the fact that the requested extension does not change the repayment dates (that will continue to apply as usual) and the Company's financial position.
As aforesaid, as part of and subject to approval of the request and extension of the raising date proposed by the Company, the controlling shareholder informed that he would participate in the capital raising to be carried out by September 30, 2020 in an amount of at least NIS 50 million.
Further to the foregoing, and according to the provisions of section 12 of the Amended Deed, the Company seeks to present a request for approval by the debenture holders at a special general meeting, to amend all deeds of trust of series B13, B18, B19, B22, B31, B33 and B34 in a manner that reflects the foregoing.
Contact:
Limor Gruber
Tel: +972 9 8638443
Email: Limorg@delek-group.com
DELEK GROUP LTD. 
