In accordance with the agreement, which Ashtrom and Ashtrom Properties reported in February 2020, the State of Israel will pay a total amount estimated at NIS 1.6 billion to CityPass, which is the franchisee of the red line of the light rail in Jerusalem. According to the state announcement, the move will be completed in practice on April 16.
The Ashtrom Group directly owns approximately 29% of the shares of CityPass (project franchisee) and the shares of Connect (the operating contractor of the project), and its subsidiary, Ashtrom Properties, which is wholly owned by the Group, holds an additional 21% of Citifs and Connect shares.
Along with the Ashtrom and Ashtrom Properties Group, CityPass and Connect also hold shares in the Harel Group (20%) and the Israel Infrastructure Fund (30%).
According to the agreement between the parties, the total payment, in the amount of NIS 1.6 billion, will be paid as follows: An initial amount of NIS 800 million will be paid upon completion of the actual execution of the BuyBack, in April 2021, and the balance will be paid 9 months after completion. And not before 31 January 2022.
Following the move, the Ashtrom Group is expected to post a consolidated net profit (attributable to shareholders) of approximately NIS 510 million. (Of which NIS 23 million will be recognized in the annual report for the summary of 2020, and the balance in the financial report of the second quarter of 2021). This profit includes the profit of the subsidiary, Ashtrom Properties, in the amount of NIS 192 million.
The Harel Group, as a pioneer of institutional investments in infrastructure, has invested NIS 30 million in the project, and will realize the investment for its insured in the amount of NIS 260 million, in addition to the profit it will record through its holding in the Israel Infrastructure Fund in the amount of NIS 50 million.
Following the said transaction, the Ashtrom Group will record a total cash flow in the amount of NIS 940 million (of which NIS 664 million for the group at the solo level, and NIS 274 million for Ashtrom Properties).
Under the agreement, all state-owned light rail assets will be transferred to state ownership, including the rail fleet and all infrastructure and systems of the project.