Delek Group Announces Updated Plan Formulated Together With Representatives of the Debenture Holders to Strengthen Collateral and Capital, in Advance of Vote Expected Next Week

TEL AVIV, Israel, June 11, 2020 /PRNewswire/ -- Delek Group (TASE: DLEKG) (US ADR: DGRLY) ("the Company") published an updated plan to amend the Company's Deeds of Trust, which has been formulated over the last few weeks between the Company's management and the trustees and representatives of the Group's debenture holders, and which will be brought for approval of a General Meeting next week. In the updated plan the Group's expected fund raising will grow to half a billion shekels, of which the Company expects to raise NIS 450 million by the end of 2020 and a further NIS 50 million by April 2020 (of which NIS 137 million has already been raised).

The main points of the published plan include the following principles:

• There will not be a change in the amounts and dates of payments to debenture holders in respect of the existing repayment schedule at the date of approval of the amendment to the Deed;
• Capital raising at Delek Group of half a billion shekels, of which NIS 450 million by the end of 2020;
• Debenture holders will transform from being unsecured creditors to secured creditors and will receive collateral to secure their payments in significant amounts of billions of shekels, including a lien on 40% of the shares of Delek Drilling and a lien on the overriding royalties from the Leviathan field;
• Repayment of the credit to the Company's and Delek Energy's lender banks in the coming months in an amount of NIS 1 billion and release of the collateral pledged in their favor;
• By May 31, 2020 the financial covenants stipulated in the original deeds of trust of the debentures will not be applicable;
• The updated Deed of Trust of the debentures includes more flexible financial covenants for Delek Group.

The plan, together with the Stand Still agreement that Delek Group is promoting with the lender banks, which will become effective simultaneously, after and subject to approval of the updated plan by the debenture holders, will prevent the possibility of realizing any core assets of the Company at present market prices, and will grant the Group time to strengthen both liquidity and the capital structure, as well as the possibility to benefit from the expected recovery in the global energy markets, which will also lead to an increase in the value of the Group's energy assets.

Idan Wallace, President and CEO of Delek Group: "In recent months we have been working tirelessly to progress significant business moves that will contribute to strengthening the capital and liquidity of the Group. As part of this we have announced, among other things, agreements to divest assets in the amount of NIS 1.5 billion, and at the same time we have formulated a plan to strengthen collateral and capital together with the representatives of the Group's debenture holders and with the lender banks, in order to provide the Company the time to continue to progress major actions that it is working on, and to benefit from the recovery in the global energy markets, signs of which we have been seen in recent weeks. The proposed plan strikes the right balance between the various requirements of the Company, the debenture holders and its secured creditors, and will allow the Group to implement a series of important strategic moves that it is working on."

As part of the proposal, and subject to its approval, the following matters inter alia are agreed:

• Provision of material collateral to the debenture holders including 40% of the shares of Delek Drilling, and a lien on the Company's rights in the overriding royalties from the Leviathan field, with all receipts in this connection serving to repay the debentures according to the existing repayment schedule.
• As part of the amendment to the Deed of Trust the Company will already pledge at the first stage 10% of the participation units of Delek Drilling in favor of the debenture holders.
• The Company intends to raise capital of NIS 300 million by July 30, 2020, a further NIS 150 million by December 15, 2020, and NIS 50 million by April 8, 2021, so that it is the Company's intention to raise NIS 500 million (as compared with the overall capital raising of NIS 400 million according to the previous proposal).
• As part of the plan, the approval of the debenture holders will be given to pledge Delek Israel to the Group's secured creditors so that they can be paid from the receipts that will be received from the sale of Delek Israel and afterwards the 40% of the participation units will be released in favor of the debenture holders that were pledged in their favor (out of 55% held by the Company). The Company undertakes to pledge the participation units in favor of the debenture holders by October 30, 2020.
• Simultaneously with the amendment of the deed the Company set up its relations with its lender banks that are mainly secured by participation units of shares of Delek Drilling. According to the principles published, shares of Delek Israel will be pledged to the secured banks of Delek Group and Delek Energy (pro-rata to the credit balance of each bank with each of the companies), in addition to the Delek Drilling participation units pledged to them for existing loans. Delek Drilling units pledged in favor of the companies' lender banks will be released in favor of the Company's debenture holders after repayment of the banks' credit. The Stand Still period with the banks will be until September 30, 2020 with the possibility of an extension by an additional month at certain terms, as published in the wording of the Stand Still document. During the Stand Still period and subject to the terms of the agreement, the banks will not demand additional collateral, will not put up the credit for immediate repayment, and will not realize the participation units of Delek Drilling, in accordance with and subject to the terms detailed in the Stand Still paper. The plan includes the agreement of the secured banks to all the liens granted to the trustees and the debenture holders under the amended Deed of Trust. 
• The Company also committed in the Deed that by October 30, 2020 it will receive NIS 400 million as a dividend from Delek Israel that will be used for repayment of debts to the banks secured by participation units of Delek Drilling, at the same time as the release of these units by the banks and their transfer as a lien in favor of the debenture holders.
• In parallel and subject to approval by the meeting of the debenture holders, the trustees of the debentures holders will undertake not to demand that the Company's debt be put up for immediate repayment, from the date of approval of the agreement until May 31, 2021, on account of claims of a reduction in the rating of the Group's debt or non-compliance with the terms of minimum shareholders' equity or other financial covenants of the Group, in their meanings in the proposal.
• In addition, the Deeds of Trust of the debentures will be amended to include the following financial covenants (that will become effective from May 31, 2021), the main points of which are: 
    - Rating of the Company's debt will not decline below BBB-; 
    - The Company's shareholders' equity will not decline from NIS 1.6 billion until the end of 2021, NIS 2 billion until the end of 2022, and NIS 2.4 billion until the end of 2023. 
    - The shareholders' equity to balance sheet ratio will be 12.5% between the financial statements for Q2 2021 until the 2021 annual financial statements; a ratio of 15% at the end of 2022; ratio of 17.5% at the end of 2023, and from 2024 a minimum ratio of 20%.

This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on June 10, 2020.

About The Delek Group

Delek Group is an independent E&P company with activities in the UK North Sea and the East Mediterranean. Delek Group has significant holdings in the Leviathan and Tamar natural gas reservoirs in the East Mediterranean (Israel's territorial water), with reserves and resources of more than 30 TCF and annual production of approximately 20 BCM. These reservoirs are a major natural gas supplier to the growing markets of Israel, Egypt and Jordan and Delek continues to lead the region's development into a major natural gas export hub. Through its wholly owned subsidiary Ithaca, Delek Group holds high-quality oil and natural gas assets in the UK North Sea totaling more than 270 million barrels of oil equivalent (boe) and producing about 27 million boe per year. Delek Group is one of Israel's largest and most prominent companies with a consistent track record of growth. Its shares are traded on the Tel Aviv Stock Exchange (DLEKG:IT) And its ADRs are traded on the US OTC market (DGRLY:US).

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

Contact

Investors

Limor Gruber
Head of Investor Relations
Delek Group Ltd.
Tel: +972 9 8638443
[email protected]  

SOURCE Delek Group Ltd

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