Egged, a prominent bus company controlled by the Keystone Foundation and the teacher and kindergarten funds with a 60% stake, has successfully garnered demands exceeding NIS 1 billion in its maiden bond issuance. The company made the strategic decision to raise NIS 494 million from this offering. The issued bonds are indexed-linked and bear an annual interest rate of 3.64%.
Notably, the interest rate of the Egged bonds is set at a margin of 2.42% above the corresponding government bond rate. This move reflects the company's intention to leverage the favorable interest rate environment to its advantage.
The raised funds are earmarked for a specific purpose: to finance a substantial NIS 500 million dividend payout that Egged intends to distribute among its shareholders. These funds will also be utilized to retire an outstanding debt held by both Keystone and the teacher and kindergarten funds, which was initially secured from Leumi and Mizrachi Tefahot banks. This debt was contracted as part of the acquisition of Egged, and its repayment is part of the broader objective to manage the company's financial obligations effectively.
The overall debt portfolio connected to the acquisition of Egged stands at NIS 1.4 billion, which Keystone and its controlling partner in the bus company jointly hold. The successful bond issuance aligns with the strategic financial planning undertaken by Keystone to navigate this debt and support Egged's operational growth.
The issuance was expertly led by IBI's underwriting company, a reputable name in the field. Legal guidance was provided by a seasoned team, including Esther Koren, who heads the mergers and acquisitions department at the Goldfarb Seligman office. Shay Hagar and Assaf Stott also contributed their legal expertise to ensure the successful execution of this significant financial undertaking.