Hadera 2 Turns the Power Story Into Financing, Execution, and Collection
The Hadera 2 financing and EPC agreements improve project probability, while separating who carries the debt, who performs the construction, and who must turn backlog into cash collection. OPC and Kenon get a project-probability step-up, Shikun & Binui gets large EPC exposure, and Elmor gets a shorter data-center job that will be tested through payment terms and execution.
On June 3, the filings around Hadera 2 turned the electricity-demand story into a much more measurable chain of financing, execution, and collection. OPC ENERGY received more than a positive sector signal: through the project company it signed a financing agreement of about $1.7 billion and an EPC agreement for an approximately 850 MW power plant. That improves the probability of construction, especially after the building permit received on May 20, while shareholder cash flow is still distant: tariff approval, an NTP (notice to proceed), gas agreements, the first drawdown under the financing agreement, and construction completion by 2030 still need to happen. SHIKUN & BINUI sits on another part of the same chain through Solel Boneh Infrastructures' stake in the contractor partnership, with estimated exposure of NIS 1.425-1.5 billion to EPC works. ELMOR ELECTRIC adds a shorter contractor economy to the same week: a roughly NIS 133 million electrical and HVAC data-center job in northern Israel, which will show up in the accounts only according to execution and collection. KENON HOLDINGS gets a holding-company read-through via OPC ENERGY, without immediate Hadera 2 cash.
Hadera 2 Has Financing and Construction Agreements Before Works Begin
OPC ENERGY published on June 3 both the Hebrew filing and the parallel English filing on the construction financing agreement and EPC agreement for Hadera 2. The difference from an ordinary project announcement is that there is now a senior debt framework, a construction contractor, and a collateral package. The difference from a project already producing cash value is that the conditions required to activate the mechanism are still incomplete.
The loan framework with Bank Leumi totals about $1.7 billion, or about NIS 4.85 billion, and is expected to finance about 80% of the estimated construction cost. Total project cost is estimated at $1.7-1.8 billion, or NIS 4.8-5.2 billion, including interest during construction and subject also to completion of the land purchase. The debt is denominated in shekels, about 25% is CPI-linked, and the interest rate is prime plus a spread of 0%-0.7%. Interest accrues until six years from the drawdown date, and the principal is barely amortized before 2036, when about 88% of the remaining principal is expected to be repaid.
That detail defines Hadera 2 as a project gaining construction capacity while shareholder cash recovery remains distant. Distributions by the project company are prohibited until six years from the first drawdown under the financing agreement, and even afterward they are subject to coverage ratios, at least one principal payment, and distribution conditions at OPC Israel. During construction, a minimum LLCR (loan life coverage ratio) of 1.05x is also required for shareholder capital injections, with failure to inject capital constituting an event of default. The agreement strengthens the project while moving part of the risk into OPC Israel's balance sheet and guarantees.
The building permit received on May 20, after the required levies were settled, was an important milestone on the way to the June 3 agreements. It was preceded by a key equipment supply agreement with GE Vernova on March 2, where part of the consideration had already been paid from internal sources and is later expected to be paid also through project financing. The sequence shows real progress: equipment, permit, financing, and contractor. What is still missing is tariff approval from the Israeli Electricity Authority, the NTP, completion of the gas agreement and land conditions, and continued adherence to the timetable toward planned completion in 2030.
The Same Power Chain Creates Different Exposures
In the power sector, demand for electricity or data centers is only the starting point. A power-plant developer benefits from higher project probability and from the value of a future asset, while bearing debt, equity, guarantees, tariff conditions, and construction risk. An EPC contractor receives larger backlog, and its economics depend on execution, costs, schedules, and the ability to protect margin under a lump-sum contract. An electrical and HVAC works contractor receives a shorter execution cycle, and it too depends on a notice to proceed, payment terms, and collection from the chain above it.
For SHIKUN & BINUI, the June 3 filing places the company on the contractor side of Hadera 2. A partnership held 50% by Solel Boneh Infrastructures, a subsidiary of SHIKUN & BINUI, and 50% by an international EPC contractor signed a Turn Key Lump-Sum EPC agreement with a subsidiary of OPC ENERGY. The total agreement scope is estimated at $1.0-1.05 billion, and the company's share is estimated at $0.5-0.525 billion, or NIS 1.425-1.5 billion.
That is a large figure. For SHIKUN & BINUI, it is execution backlog rather than ownership of a power plant. The company reports that the expected gross margin is similar to the rates at which the group prices works of this type, and the contract is subject to receiving an NTC or NTP from OPC ENERGY by the agreed date, as well as approvals and permits. A lump-sum format places broader execution responsibility on the contractor, even if some of the consideration is denominated in several currencies and partly linked to indices to reduce currency and cost-escalation exposures. SHIKUN & BINUI's exposure is therefore mainly revenue and backlog with execution risk, not direct exposure to electricity prices or future power-plant distributions.
KENON HOLDINGS published a 6-K on the same day for the same event through OPC ENERGY. The English filing repeats the project economy and sharpens the holding-company read. For KENON HOLDINGS, Hadera 2 raises the probability of value inside OPC ENERGY and deepens its investment path, while immediate cash flow to the holding company has not been created. The value will be tested by OPC ENERGY's ability to build the project without financing or execution surprises, and by the timing at which such an asset can support distributions or holding value.
Elmor Gets a Shorter Backlog Cycle, With Collection Doing More Work
ELMOR ELECTRIC does not own a power plant and does not take Hadera 2 tariff risk. Its June 3 win is an electrical and HVAC work package for a data-center project in northern Israel, under the main contractor, for about NIS 133 million. The works include electromechanical systems, high-voltage and low-voltage panels, transformers, and extra-low-voltage systems, with planning and construction expected to take about 10 months from the notice to proceed.
The order size is only part of the point. In the first quarter, ELMOR ELECTRIC had already pointed to stronger activity in data centers, alongside a slower pace of new project intake into electrical contracting backlog. After the balance-sheet date, on May 14, it agreed to expand another data-center project to 10 MW IT, including generators and maintenance, for cumulative consideration of about NIS 224 million. The new win adds another proof point that data centers create work for electrical and HVAC contractors, alongside the demand they add to power generation.
The less comfortable part is in the execution terms. ELMOR ELECTRIC will provide performance and warranty guarantees under back-to-back terms between the main contractor and the customer. The expected profitability rate is within the company's customary range for works of this type, not above it. In the first quarter, the company had already shown an increase in customers, receivables, and contract assets, mainly due to more customer days in the electrical segment, alongside an increase in inventory purchased for short-term project execution. The NIS 133 million win will therefore be tested less by the backlog itself and more by whether revenue arrives without an unusual expansion of customer credit or cash absorption through inventory and suppliers.
The Next Filings Need Tariff Approval, NTP, and Collection
These filings break the power economy into several layers. OPC ENERGY gets a real improvement in Hadera 2 probability, alongside a path of large debt, guarantees, a long distribution block, and dependence on tariff approval and NTP. SHIKUN & BINUI gets larger contractor exposure, with a lump-sum contract that can become material backlog if the conditions are met and execution is disciplined. ELMOR ELECTRIC gets data-center work that can be recognized faster than a power plant, and its cash depends on collection, advances, and inventory management. KENON HOLDINGS mainly gets higher value probability through OPC ENERGY, without a shortcut to cash.
The next filing that changes the Hadera 2 read will be tariff approval and the NTP to the contractor, not another broad statement about electricity demand. For SHIKUN & BINUI, the important signal will be revenue recognition without abnormal margin erosion or execution claims. For ELMOR ELECTRIC, the number that will decide the quality of the win is the conversion of data-center backlog into revenue and cash collection. Until then, the distinction is clear: the developer buys project probability with debt and equity, the contractor takes execution responsibility, and the subcontractor must turn infrastructure demand into actual cash.
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