Israel's Delek & Avner plans $275 million in senior secured notes for natural gas project

By Reshmi Basu

New York, Feb. 23 - Delek & Avner -Yam Tethys Ltd. plans to issue $275 million in fixed- and floating-rate notes in a project finance deal, according to market sources.

The notes will carry a maturity date of Aug. 1, 2013 with an expected average life of 4.1 years.

Sponsors for the project include Delek Drilling LP, Avner Oil Exploration and Delek Investments and Properties Ltd. Noble Energy is the operator and also an owner.

State-owned Israel Electric Corp. Ltd. (Baa2/BBB+) will purchase natural gas under a gas sale and purchase agreement.

Proceeds from the notes will be used to refinance existing loans, pay transaction costs and fund reserve accounts and distributions to the sponsors.

The issuer started marketing Wednesday in New York City, will move to Boston on Thursday and Los Angeles on Friday.

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