SINGAPORE, March 26,
2024 /PRNewswire/ -- Kenon Holdings Ltd. (NYSE: KEN)
(TASE: KEN) ("Kenon") announces its results for 2023
and additional updates.
Q4 and Recent Highlights
Kenon
- In March 2024, Kenon's board of
directors approved a cash dividend of approximately $200 million ($3.80
per share) payable in April
2024.
OPC
- Financial results:
- OPC's net profit in 2023 was $47
million, as compared to a net profit of $65 million in 2022. OPC's 2023 net profit
included its share in profit of CPV of $66
million as compared to $85
million in 2022.
- OPC's Adjusted EBITDA1 (including proportionate
share in Adjusted EBITDA1 of associated companies) in
2023 was $304 million as compared to
$250 million in 2022.
ZIM
- Financial results2:
- ZIM reported a net loss in 2023 of $2.7
billion, which included a non-cash impairment of
$2.1 billion, as compared to net
profit of $4.6 billion in 2022.
- ZIM reported Adjusted EBITDA1 in 2023 of
$1 billion, as compared to
$7.5 billion in 2022.
Discussion of Results for the Year ended December 31, 2023
Kenon's consolidated results of operations from its operating
companies essentially comprise the consolidated results of OPC
Energy Ltd ("OPC"). Our share of the results of ZIM
Integrated Shipping Ltd. ("ZIM") is reflected under results
from associated companies.
See Exhibit 99.2 of Kenon's Form 6-K dated March 26, 2024 for a summary of Kenon's
consolidated financial information; a summary of OPC's consolidated
financial information; a reconciliation of OPC's EBITDA and
Adjusted EBITDA (including proportionate share in Adjusted EBITDA
of associated companies) (which is a non-IFRS measure) to profit
for the period; a summary of financial information of OPC's
subsidiaries; and a reconciliation of ZIM's Adjusted EBITDA (which
is a non-IFRS measure) to (loss)/profit for the period.
OPC
The following discussion of OPC's results of operations is
derived from OPC's consolidated financial statements, which are
denominated in NIS for purposes of OPC's financial statements, as
translated into US dollars for Kenon's financial statements.
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Summary Financial
Information of OPC
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For the year
ended
December 31,
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2023
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2022
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$
millions
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Revenue
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692
|
|
574
|
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Cost of sales
(excluding depreciation and amortization)
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(494)
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(417)
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Finance expenses,
net
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(53)
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(14)
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Share in profit of
associated companies, net
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66
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85
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Profit for the
period
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47
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65
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Attributable
to:
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Equity holders of
OPC
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40
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|
50
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Non-controlling
interest
|
7
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15
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|
|
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Adjusted
EBITDA3
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304
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250
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|
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|
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For details of OPC's
results please refer to Appendix B.
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Revenue
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For the year
ended
December 31,
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|
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2023
|
|
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2022
|
|
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$
millions
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|
|
|
|
|
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Israel
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619
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|
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517
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|
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U.S.
|
73
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|
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57
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Total
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692
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574
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OPC's revenue increased by $118
million in 2023 as compared to 2022. Excluding the impact of
translating OPC's revenue from NIS to USD4, OPC's
revenue increased by $169 million in
2023 as compared to 2022. Set forth below is a discussion of
significant changes in revenue between 2023 and 2022.
OPC's revenue from the sale of electricity to private customers
is derived from electricity sold at the generation component
tariffs, as published by the Israeli Electricity Authority
("EA"), with some discount. Accordingly, changes in the
generation component tariffs generally affect the prices paid by
customers under Power Purchase Agreements of OPC-Rotem and
OPC-Hadera. The weighted-average generation component tariff in
2023 was NIS 30.53 per KW hour, which
is approximately 4% higher than the weighted-average generation
component tariff in 2022 of NIS 29.27
per KW hour.
Set forth below is a discussion of changes in the key components
in revenue for 2023 as compared to 2022.
- Revenue from sale of energy to private customers in
Israel – Increased by
$25 million in 2023 as compared to
2022. Excluding the impact of translating OPC's revenue from NIS to
USD, such revenues increased by $57
million primarily as a result of (i) an increase of
$49 million from an increase in
customer consumption and (ii) an increase of $24 million from the consolidation of results of
the Gat Power Plant which was consolidated starting in Q2 2023,
partially offset by (iii) a decrease of $9
million as a result of the change in demand hour
brackets;
- Revenue from private customers in respect of infrastructure
services – Increased by $36
million in 2023 as compared to 2022. Excluding the impact of
translating OPC's revenue from NIS to USD, such revenues increased
by $45 million, primarily as a result
of (i) an increase of $26 million
from an increase in the infrastructure tariff, (ii) an increase of
$12 million from an increase in
customer consumption and (iii) an increase of $8 million from the consolidation of results of
the Gat Power Plant beginning in Q2 2023;
- Revenue from sale of energy to the System Operator and to
other suppliers – Increased by $16
million in 2023 as compared to 2022. Excluding the impact of
translating OPC's revenue from NIS to USD, such revenues increased
by $18 million, primarily as a result
of (i) an increase of $18 million
from the commencement of commercial operations of Tzomet Power
Plant in June 2023 and (ii) an
increase of $4 million from the
consolidation of results of the Gat Power Plant beginning in Q2
2023;
- Revenue from capacity payments – Increased by
$16 million in 2023 as compared to
2022, primarily as a result of the commencement of commercial
operations of Tzomet Power Plant in June
2023; and
- Other revenue – Increased by $5
million in 2023 as compared to 2022, primarily as a result
of the commencement of commercial operations of Tzomet Power Plant
in June 2023.
Cost of Sales
(Excluding Depreciation and Amortization)
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For the year
ended
December 31,
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|
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2023
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2022
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$
millions
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|
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Israel
|
|
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453
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|
|
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385
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U.S.
|
|
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41
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32
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Total
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494
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417
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OPC's cost of sales (excluding depreciation and amortization)
increased by $77 million from 2022 to
2023. Excluding the impact of translating OPC's cost of sales
(excluding depreciation and amortization) from NIS to
USD5, OPC's cost of sales (excluding depreciation
and amortization) increased by $115
million in 2023 as compared to 2022. Set forth below is a
discussion of significant changes in cost of sales between 2023 and
2022.
- Natural gas and diesel oil consumption in Israel – Increased by $23 million in 2023 as compared to 2022.
Excluding the impact of translating these costs from NIS to USD,
such costs increased by $37 million
primarily due to (i) an increase of $11
million from the consolidation of results of the Gat Power
Plant beginning in Q2 2023, (ii) the commencement of commercial
operations of Tzomet Power Plant in June
2023, (iii) an increase of $14
million due to an increase in the generation component and
the USD/NIS exchange rate and (iv) an increase of $14 million as a result of an increase in the
quantity of gas consumed, partially offset by (v) a decrease in gas
expenses of $14 million as a result
of the commencement of delivery of gas from Energean from Q2
2023;
- Expenses for infrastructure services in Israel – Increased by $36 million in 2023 as compared to 2022.
Excluding the impact of translating these costs from NIS to USD,
such costs increased by $45 million
primarily as a result of (i) an increase of $26 million linked to the infrastructure tariff,
(ii) an increase of $12 million due
to an increase in customer consumption and (iii) an increase of
$8 million from the consolidation of
results of the Gat Power Plant beginning in Q2 2023; and
- Operating expenses and other expenses – Increased by
$20 million in 2023 as compared to
2022. Excluding the impact of translating these costs from NIS to
USD, such costs increased by $22
million primarily as a result of (i) the commencement of
commercial operations of Tzomet Power Plant in June 2023 and (ii) consolidation of results of
the Gat Power Plant beginning in Q2 2023.
Finance Expenses, net
Finance expenses, net in 2023 was $53
million, as compared to $14
million in 2022, primarily due to (i) an increase in
interest expense relating to loans for the Gat Power Plant and the
Mountain Wind project of $7 million
and $4 million, respectively, and
(ii) an increase in interest expense from the commencement of
commercial operations of Tzomet Power Plant of $8 million, partially offset by an increase in
interest income from deposits.
Share of Profit of Associated Companies, net
OPC's share of profit of associated companies, net decreased by
$19 million in 2023 as compared in
2022, primarily as a result of a decrease in energy margins
compared with 2022, partially offset by increased availability of
CPV Valley Power Plant in 2023 as compared to 2022 when the power
plant was undergoing maintenance work.
For further details of the performance of associated companies
of CPV, refer to OPC's immediate report published on the Tel Aviv
Stock Exchange ("TASE") on March 12,
2024 and the convenience English translations of OPC's Board
of Directors Report and Financial Statements for the year ended
December 31, 2023 furnished by Kenon
on Form 6-K on March 12, 2024.
Liquidity and Capital Resources
As of December 31, 2023, OPC had
cash and cash equivalents of $278
million (excluding restricted cash and including debt
service reserves of $91 million),
restricted cash of $17 million, and
total outstanding consolidated indebtedness of $1,530 million, consisting of $170 million of short-term indebtedness and
$1,360 million of long-term
indebtedness. As of December 31,
2023, a substantial portion of OPC's debt was denominated in
NIS.
As of December 31, 2023, OPC's
proportionate share of debt (including accrued interest) of CPV
associated companies was $839 million
and proportionate share of cash and cash equivalents was
$25 million.
Business and other Developments
Tariff Update
On February 1, 2024, the annual
update of the electricity tariffs of the EA for 2024 entered into
effect, decreasing the generation component by 1.1% to NIS 0.3007 per KW hour.
OPC-Rotem Supply License
In March 2024, OPC reported that
the EA issued a resolution (the "Supply License Resolution")
regarding the hearing on complementary arrangements and the
application of certain regulatory standards to OPC-Rotem (in which
OPC has an 80% indirect stake). The Supply License Resolution will
come into force on May 1, 2024.
See our Annual Report on Form 20-F for the year ended December 31, 2023 for more information.
ZIM
Discussion of ZIM's Results6 for
2023
ZIM carried approximately 3,281 thousand TEUs in 2023
representing approximately a 3% decrease as compared to 2022, in
which ZIM carried approximately 3,380 thousand TEUs. The average
freight rate in 2023 was $1,203 per
TEU, representing approximately a 63% decrease as compared to
$3,240 per TEU in 2022.
ZIM's revenues decreased by approximately 59% in 2023 to
$5.2 billion, as compared to
$12.6 billion in 2022, primarily due
to a decrease in freight rates.
ZIM's operating loss and net loss was $2.5 billion and $2.7
billion, respectively, in 2023, as compared to operating
income and net income of $6.1 billion
and $4.6 billion, respectively, in
2022. Operating loss in 2023 includes a non-cash impairment of
$2.1 billion. ZIM's Adjusted
EBITDA1 in 2023 was $1
billion as compared to $7.5
billion in 2022.
ZIM's total cash (which includes cash and cash equivalents and
investments in bank deposits and other investment instruments) was
$2.7 billion as of December 31, 2023, as compared to $4.6 billion as of December 31, 2022.
Additional Kenon Updates
Kenon's (stand-alone) Liquidity and Capital
Resources
As of December 31, 2023, Kenon's
stand-alone cash was $634 million. As
of March 26, 2024, Kenon's
stand-alone cash was $639 million.
There is no material debt at the Kenon level.
Kenon's stand-alone cash includes cash and cash equivalents and
other treasury management instruments.
Interim Dividend for the Year Ending December 31, 2024
In March 2024, Kenon's board of
directors approved an interim cash dividend of approximately
$200 million ($3.80 per share) (the "Dividend") relating
to the year ending December 31, 2024,
payable to Kenon's shareholders of record as of the close of
trading on April 8, 2024 (the
"Record Date"), to be paid on or about April 15, 2024 (the "Payment Date").
The New York Stock Exchange's (the "NYSE") ex-dividend
date, which is the date on which Kenon's shares will begin trading
on the NYSE without the entitlement to the Dividend, is
April 5, 2024.
The TASE ex-dividend date, which is the date on which Kenon's
shares will begin trading on the TASE without the entitlement to
the Dividend, is April 8, 2024.
We encourage you to contact your bank, broker, nominee or other
institution if you have any questions regarding the mechanics and
timing of having the Dividend attributable to your shares credited
to your account.
Singapore tax is not expected
to be imposed on Kenon's shareholders in connection with the
Dividend. Nevertheless, the Dividend may constitute a taxable event
to Kenon's shareholders according to their jurisdiction and the
relevant tax law applicable (including for the purpose of
withholding tax in accordance with applicable law and/or
regulation). Kenon's shareholders should consult their tax advisors
with respect to the federal, state, and/or any other applicable tax
consequences of the Dividend, and the potential imposition of
withholding taxes in connection with the Dividend.
Bilateral Investment Treaty Claims Relating to
Peru
In October 2023, an arbitration
tribunal constituted by the International Centre for Settlement of
Investment Disputes ("ICSID") delivered a final award (the
"ICSID Award") in favor of Kenon and IC Power
Ltd. ("IC Power") in an arbitration proceeding against the
Republic of Peru ("Peru") under the Free Trade Agreement
between Singapore and Peru.
Pursuant to the ICSID Award, Peru
has been ordered to pay Kenon and IC Power a total of $110.7 million in damages, together with
$5.5 million in fees and costs and
pre-award and post-award interest. Pursuant to Article 49 of
the ICSID Convention, the parties have submitted requests
seeking rectification of and/or supplementation to the ICSID Award
relating to the tribunal's award of interest and costs. These
requests do not impact the tribunal's principal award of damages.
Kenon is taking steps to enforce the ICSID Award.
As previously disclosed in Kenon's Form 20-F, Kenon and IC Power
have previously entered in an agreement with a capital provider to
provide capital for expenses in relation to the pursuit of these
arbitration claims and other costs. In the event that Kenon or IC
Power receives proceeds in connection with the ICSID Award or
settlement thereof, the capital provider will be entitled to be
repaid the amount committed by the capital provider and to receive
a portion of the claim proceeds.
The ICSID Award is subject to tax.
Qoros update
In February 2024, the China
International Economic and Trade Arbitration Commission
("CIETAC") issued a final award (the "CIETAC Award")
in favor of Kenon's wholly-owned subsidiary Quantum (2007) LLC
("Quantum") with respect to arbitral proceedings initiated
by Quantum in 2021 against an entity related to Shenzhen Baoneng
Investment Group Co., Ltd. ("Baoneng Group"), which holds
63% of Qoros (the "Qoros Majority Shareholder") and Baoneng
Group in connection with the agreement for the sale of Quantum's
remaining 12% interest in Qoros to the Majority Qoros
Shareholder. The tribunal ruled that the Qoros Majority
Shareholder and Baoneng Group are obligated to pay Quantum
approximately RMB 1.9 billion
(approximately $268 million)
comprising the purchase price set forth in the Sale Agreement (as
adjusted for inflation) of approximately RMB
1.7 billion (approximately $239
million), together with pre-award and post-award interest,
legal fees and expenses. Any value that could be realized in
respect of the CIETAC Award is subject to significant risks and
uncertainties, including risks relating to enforcement and
collection of the CIETAC Award and other risks and
uncertainties.
In addition, the lenders under Qoros' RMB
1.2 billion loan facility have obtained a court order in
respect of a payment default by Qoros, subject to Baoneng Group's
appeal against such order. The court order (when effective) would,
among other things, enable the lenders to take steps to enforce
pledges over Qoros' assets and other security for the loan
including the shares in Qoros pledged by its shareholders to secure
the loan, including Quantum's pledge of its 12% interest in
Qoros.
1 Adjusted EBITDA is a non-IFRS measure. See
Exhibit 99.2 of Kenon's Form 6-K dated March
26, 2024 for the definition of OPC's EBITDA and Adjusted
EBITDA (including proportionate share in Adjusted EBITDA of
associated companies) and ZIM's Adjusted EBITDA and a
reconciliation to their respective net (loss)/profit for the
applicable period.
2 Represents 100% of ZIM's results. Kenon owns and
owned during the years ended December 31,
2023 and December 31, 2022
approximately 21% of ZIM.
3 Non-IFRS measure. See Appendix C for a definition
of OPC's Adjusted EBITDA and a reconciliation to profit for the
period.
4 The table above and corresponding comparison relating
to 2023 and 2022 were converted using an average exchange rate of
$0.2710/NIS.
5 Comparing 2023 and 2022 using the average exchange
rate of $0.2710/NIS.
6 Represents 100% of ZIM's results. Kenon owns and
owned during the years ended December 31,
2023 and December 31, 2022
approximately 21% of ZIM.
About Kenon
Kenon has interests in the following businesses:
- OPC (55% interest) – a leading owner, operator and developer of
power generation facilities in the Israeli and U.S. power
markets;
- ZIM (21% interest) – an international shipping company.
Kenon has agreed to sell its remaining 12% interest of Qoros, a
China-based automotive company to
the Majority Shareholder.
For further information on Kenon, including its businesses and
strategy, see Kenon's publicly available filings, which can be
found on the SEC's website at www.sec.gov. Please also see
www.kenon-holdings.com for additional information.
Caution Concerning Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include statements relating to (i) with
respect to OPC, including tariff rates and the Supply License
Resolution, including the provisions thereof, (ii) Kenon's
announced dividend, (iii) the ICSID Award including interest
payable on the ICSID Award, procedural steps that have been or may
be taken with respect to the ICSID Award and the agreement with a
capital provider and its entitlement to a portion of the ICSID
Award, (iv) the CIETAC Award and Quantum's intention to enforce the
CIETAC Award, the court order in respect of the payment default by
Qoros and impact of such order and (v) other non-historical
matters. These statements are based on current expectations or
beliefs and are subject to uncertainty and changes in
circumstances. These forward-looking statements are subject to a
number of risks and uncertainties, many of which are beyond Kenon's
control, which could cause the actual results to differ materially
from those indicated in such forward-looking statements. Such risks
include (i) tariff rates applicable to OPC for 2024, and risks
relating to the terms of the Supply License Resolution and the
impact on OPC-Rotem, and other risks, (ii) risks relating to
payment of Kenon's announced dividend, (iii) risks relating to the
ICSID Award including a potential application to annul the ICSID
Award, Kenon's ability to enforce the ICSID Award and collect the
amounts awarded thereunder and interest payable thereon, and
amounts payable to the capital provider and to Kenon, (iv) risks
related to the CIETAC Award, including the risk that Quantum may be
unable to enforce the CIETAC Award or otherwise collect the amounts
awarded or otherwise owing to it, and risks relating to the order
in respect of the payment default by Qoros and the pledge by
Quantum of its 12% interest in Qoros including the risk of
enforcement of the pledge and impact thereof and (v) other risks
and factors including those risks set forth under the heading "Risk
Factors" in Kenon's most recent Annual Report on Form 20-F filed
with the SEC and other filings. Except as required by law, Kenon
undertakes no obligation to update these forward-looking
statements, whether as a result of new information, future events,
or otherwise.
Contact Info
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Kenon Holdings
Ltd.
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Deepa
Joseph
Chief Financial
Officer
deepaj@kenon-holdings.com
Tel: +65 9669
4761
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SOURCE Kenon Holdings Ltd.