May 7, 2020 / 2:18 PM / a month ago

Delek signs deal to sell fuel storage unit for 720 million shekels

JERUSALEM (Reuters) - Israel’s Delek Group (DLEKG.TA) said on Thursday it had signed a binding agreement to sell its fuel storage and distribution company Pi Gelilot to a third party for 720 million shekels ($205 million) as it continues to sell assets to pay its debts.

The company did not name the buyer, but said the deal, still subject to regulatory and board approvals, includes the land on which the fuel terminals are operated in the cities of Haifa, Ashdod, Beer Sheva and Jerusalem.

Delek has been hard hit by the coronavirus outbreak and drop in global oil prices and has been selling assets to raise funds. Its stock price and bond prices have been hit hard this year and the company is in talks with bond and other credit holders to negotiate a settlement. Delek’s auditors have placed a “going concern” warning on the firm.

“The memorandum of understanding is subject to receiving the approvals of the boards of directors of the parties and a deposit of 100 million shekels by the buyer in escrow within one business day from receipt of approvals of the boards,” it said in a regulatory filing.

A detailed agreement will be signed within 30 days, it said, and the balance will be paid within another 30 days.

Bondholders, concerned over the firm’s financial situation, have threatened to call for Delek to repay all of the 6 billion shekels owed them if the company did not immediately inject 400 million shekels to shore up its balance sheet.

Delek, which holds key stakes in Israel’s two main natural gas fields, has already sold a number of assets to raise cash and said this week it was seeking to sell its holdings in its Delek Israel unit as well as to receive royalties in two smaller gas sites.

Reporting by Ari Rabinovitch; Editing by Steven Scheer

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