Delek : Fullfillment of the Conditions Precedent in the Transaction for the Sale of 9.25% of the Participation Interests in the Tamar and Dalit Leases

Fullfillment of the Conditions Precedent in the Transaction for the Sale of 9.25% of the Participation Interests in the Tamar and Dalit Leases

Tel Aviv, July 19, 2017. Delek Group (TASE: DLEKG, US ADR: DGRLY) ('the Company') announces that the attached is an Immediate Report published by Delek Drilling - Limited Partnership ('the Partnership') regarding the Partnership's fulfillment of the conditions precedent in the transaction for the sale of 9.25% of the participation interests in the Tamar and Dalit Leases, as set out in the attached report.

The Company believes, based on its estimates, that on completion of the sale agreement, and subject to the fulfillment of the remaining conditions precedent set out in the sale agreement, that the Company is expected to recognize a profit of some half a billion shekels, net of taxes, attributable to the Company's shareholders, in its financial statements as at September 30, 2017.
It is further noted that the Company is assessing the possible effect of this sale on the recognition of additional accounting profit (revaluation), in respect of its rights to underlying royalties from third parties.

Further to the Immediate Reports published by the Partnership on July 4, 2017 and July 16, 2017, regarding the Partnership's signing of a contingent sale agreement with Tamar Petroleum Ltd. ('the Company') for the sale of 9.25% (out of 100%) of the participation interests in the I/12 Tamar and I/13 Dalit leases ('the Object of the Sale'). One of the conditions precedent in the agreement is the receipt of the results of the share offering under the shelf offering memorandum released by the Company, according to which the Company will succeed in raising the minimum amount set out in the offering ('the Sale Agreement' or 'the Sale Transaction'), and the Partnership is pleased to announce that this precondition has been fulfilled.

Upon completion of the Sale Transaction, subject to the fulfillment of the other preconditions set out in the Sale Agreement, as set out in the Immediate Report of July 4, 2017, the Partnership is expected to receive the consideration for the Object of the Sale in the amount of USD 980 million, of which USD 850 million, net of issuance expenses and an amount of USD 34 million to be retained by the Company as a loan repayable prior to distribution of the first dividend out of the Company's profits, to be received in cash and the remainder by way of the allotment of 20 million ordinary shares of the Company (out of 50 million shares), representing 40% of the Company's issued and paid-up share capital subsequent to completion of the Sale Transaction. The Partnership believes, based on its estimates, that the Partnership is expected to recognize a profit of USD 550 million from the Sale Transaction in its financial statements as at September 30, 2017.

Of the total consideration, the Partnership will use USD 323 million for partial early repayment of four series of debentures issued by Delek and Avner (Tamar Bond) Ltd., a wholly-owned subsidiary of the Partnership, in accordance with the terms of the debentures. The Partnership is expected to use the balance of the consideration, among other things, to distribute profits, including distribution of advance tax payments, as set out in section 4.3.3 of the Partnership's Periodic Report as at December 31, 2016, which was published on March 23, 2017 (Ref. No. 2017-01-023917), in accordance with the Partnership Agreement of July 1, 1993 (as amended from time to time).

It should be noted that the TASE lock-up provisions will apply to Company's shares that will be alloted to the Partnership. In addition, in accordance with the distribution agreement of the Partnership and Tamar Petroleum with HSBC and JP Morgan dated July 18, 2017, in the period ending 180 days after trading in the Company's shares begins, the Partnership undertook (A) not to offer, sell, pledge or make any other disposition in shares or in securities convertible to the Company's shares; (B) not to carry out swap transactions or other similar arrangements whose economic nature is the performance of such a disposition; or (C) not to propose a resolution at a general meeting or to convene a general meeting in which the agenda includes the approval of an allotment of shares or securities convertible to shares; other than in the following cases: (1) receipt of the written consent of the international distributors; (2) allotment of the shares in accordance with the distribution agreement; (3) a disposition in response to a merger proposal; (4) a disposition as part of a general buyback plan of the Company; (5) a disposition by virtue of the law or under a court order; (6) a disposition of shares as part of a private sale, provided that the share limitations in sections (1) to (5) above are accepted.

Warning regarding forward-looking information:
It should be clarified that the above information, including with respect to the rights transfered by virtue of the Sale Agreement, the fulfillment of the remaining conditions precednet, the possibility of closing the Sale Transaction, the effect of the Sale Transaction (if completed) on the Partnership's financial statements and the Partnership's assessment regarding the scope of the expected profit from the closing of the Sale Transaction, is forward-looking information as defined in the Israel Securities Law, 1968, and there is no certainty that it will materialize, in whole or in part, in the aforesaid manner. The above information may materialize in a substantially different manner, due to various factors, including non-fulfillment of all or part of the conditions precedent, delays in the timetables for their receipt, or USD-NIS exchange rate fluctuations. In addition, the contents of this report do not constitute a declaration and/or undertaking to distribute profits.

This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on July 19, 2017.

About The Delek Group

Delek Group is an independent E&P and the pioneering visionary behind the development of the East Med. With eight consecutive finds in the Levant Basin, Delek is leading the region's development into a major natural gas export hub. In addition, Delek has embarked on an international expansion with a focus on high-potential opportunities in the North Sea and North America. Delek Group is one of Israel's largest and most prominent companies with a consistent track record of growth. Its shares are traded on the Tel Aviv Stock Exchange (TASE:DLEKG) and are part of the TA 35 Index.

For more information on Delek Group please visit www.delek-group.com

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