Kenon sells part of Zim stake, plans $552m dividend

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Kenon Holdings (TASE: KEN; NYSE: KEN), controlled by Idan Ofer, is stocking up on cash and plans a dividend distribution of $552 million through a capital reduction (subject to approval by the shareholders and by the court). Ofer, who holds 60.3% of Kenon, will receive $333 million. Ofer received a $114 million slice of the $189 million dividend that Kenon distributed in January this year.

Kenon reported a net profit attributable to shareholders of $930 million for 2021. This follows a $507 million profit for 2020. In its 2021 financial statements, Kenon reported that in March it sold six million shares in Zim Integrated Shipping Services Ltd. for $463 million.

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The sale reduced Kenon’s holding in Zim from 25.7% to 20.7%. Thanks to the sale, Kenon had $504 million cash at the end of March 2022, but this week that amount will rise to $982 million, while the company is free of debt. The reason is a $2.04 billion dividend that Zim will distribute on April 4, of which Kenon’s share is $503 million, or $478 million post tax.

As mentioned, Kenon plans to exploit its accumulated cash to distribute a dividend of $10.25 per share ($552 million) through a capital reduction. The company will ask its shareholders to approve the move at the annual shareholders meeting on May 19, and at the same time it will apply for approval to the High Court in Singapore, where it is registered.

Besides its remaining 20.7% stake in Zim, worth some $1.83 million, Kenon holds 58.8% of power generator OPC Energy, worth NIS 4.33 billion ($1.36 billion), and 12% of Chinese car maker Qoros Automotive. In April 2021, Kenon agreed a sale of its Qoros stake to Chinese company Baoneng Group for $245 million, but Baoneng has failed to make the required payments under the sale agreement.

Kenon says that in the fourth quarter of 2021 it instituted arbitration proceedings against Baoneng Group before the China International Economic and Trade Arbitration Commission. The proceedings continue.

At the close of trading in New York on Friday, Kenon Holdings had a market cap of $3.58 billion. Over the past two years, investment in Kenon shares has yielded a return of 383%, adjusted for dividends.

Published by Globes, Israel business news – en.globes.co.il – on April 3, 2022.

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