HADERA, Israel,
Jan. 25, 2012
(Press Release) -
Hadera Paper Ltd. (hereinafter: "The Company") does hereby announce that an Agreement was signed on January 25, 2012, between the Company and the partners in the Tamar Project (footnote 1), (hereinafter: - "Tamar") pursuant to which, subject to having met the preconditions stipulated in the Agreement, the Company will purchase natural gas from Tamar (hereinafter: "The Agreement") according to the following principal conditions:
1. The annual quantity of gas that will be purchased by the Company will total approximately 8,000,000 MMBTU (hereinafter: "The Annual Quantity"). The overall quantity of gas that will be purchased by the Company may reach a total of approximately 118,000,000 MMBTU (hereinafter: "The Overall Quantity").
2. Despite the aforesaid, the Company reserves the right to reduce the Annual Quantity by approximately one half, in the event that the Company decides not to establish the new power station whose construction is currently being contemplated by the Company. This right may be exercised until September 1, 2012.
3. In the event that within a period of three years subsequent to having exercised the said right to reduce the Annual Quantity, the Company shall decide to establish the power station, Tamar reserves the right to once more increase the quantities, following written notice that it will provide.
4. The price of gas that was determined will be linked to the electricity generation price, as determined from time to time by the Public Utilities Authority - Electricity. The Agreement also includes a minimum price.
5. The period during which gas will be delivered pursuant to the Agreement is expected to begin in the middle of the year 2013 and last for 15 years, or until such time as the Overall Quantity is reached, the earliest of the two. The parties possess the right to extend the term of the Agreement by an additional period of up to two years, in the event that the Overall Quantity has not yet been reached by that time.
6. The Agreement includes additional understandings that are common in such agreements, such as compensation mechanisms in the event of a shortage of supply, Take or pay payment mechanism, gas quality, maximum liability and more.
The Company estimates that the overall financial volume of the Agreement (based on a Company estimate of the price of gas, subsequent to linkage according to the formula, over the term of the Agreement) may amount to a total of approximately $750 million, in the event that the right to reduce the Annual Quantity has not been exercised, according to Section 2, above.
The estimates regarding the overall financial volume of the Agreement constitute forwardlooking information, as defined by the Securities Law (1968). There is no certainty that this will materialize, in whole or in part, and may actually materialize in a manner that is materially different than anticipated over the term of the Agreement, as a result of changes in a variety of conditions, including changes in the date of completion of the power station, the pace and timing of the consumption of natural gas and primarily - changes in electricity generation prices.
In parallel, the Company is continuing to evaluate the project for the establishment of a new power station at the Hadera site and is initiating various measures in order to promote the matter and render it possible to reach a decision regarding the establishment of the said power station.
1 The partners in the Tamar Project include: Noble Energy Mediterranean Ltd., Isramco Negev - 2 Limited Partnership, Avner Oil Exploration - Limited Partnership, Delek Drilling - Limited Partnership, Dor Gas Exploration - Limited Partnership.
