Aug 14, 2015. /Lesprom Network/. Kenon Holdings Ltd. has announced that IC Power has completed the acquisition of 100% of the shares of Advanced Integrated Energy (AIE) from Hadera Paper Ltd. AIE holds a conditional license for the construction of a 120 MW cogeneration power station in Israel. The project is in the advanced development stage and construction is expected to commence in early 2016, as the company said in the press release received by Lesprom Network.

AIE's power plant is expected to supply the electricity and steam needs of Hadera Paper's facility, as well as to provide electricity to end users in Israel. The power plant will operate using natural gas and diesel oil and is expected to have a relatively high level of energy utilization due to usage of the cogeneration technology, which supplies electricity and steam in a single production process.

In connection with the completion of the transaction, Hadera Paper has agreed to sell equipment that it uses to produce steam and electricity within its manufacturing plant to AIE on the earlier of December 30, 2015 and the date AIE holds an electricity generation license for such equipment. Until that time, AIE shall lease such equipment from Hadera Paper.

The consideration for the transaction was NIS 60 million (approximately $16 million), of which approximately NIS 24 million (approximately $6 million) was in the form of a loan which will be converted into consideration (and considered a payment to Hadera Paper) upon completion of the sale of the aforementioned equipment to IC Power.

In connection with the completion of the transaction, Hadera Paper has assigned to AIE a gas supply agreement with the Tamar partners relating to the facility and the related gas transport agreement with Israel Natural Gas Lines Ltd.

In addition, on June 8, 2015, AIE and Hadera Paper have entered into agreements for AIE's supply of electricity and steam from the AIE power plant to be constructed by IC Power to Hadera Paper's facility from closing and for a period of 18 years from the date the power plant commences operations. AIE will also lease from Hadera Paper the land on which the power generation plant is located for a period from closing and up to 20 years from the date of commercial operation of the plant.

Based off its initial assessment, IC Power expects that the cost of completing the AIE plant (including the consideration for the acquisition of AIE and the construction of the power station) will be approximately $200 million.