Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
EXHIBIT 99.1 TO THIS REPORT ON FORM 6-K IS INCORPORATED
BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-201716) OF KENON HOLDINGS LTD. AND IN THE PROSPECTUSES RELATING
TO SUCH REGISTRATION STATEMENT.
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Exhibit 99.1
Kenon’s
Subsidiary OPC Energy Ltd. Announces Construction Finance
Agreement and EPC Agreement for the Hadera Power Plant Expansion Project
Singapore, June 3, 2026. Kenon Holdings
Ltd.’s (NYSE: KEN, TASE: KEN) (“Kenon”) subsidiary OPC Energy Ltd. (“OPC”) has announced that
OPC’s project company OPC Hadera Expansion Ltd. entered into (i) an agreement to finance (the “Finance Agreement”)
the construction of the Hadera expansion project, a combined-cycle natural gas-fired power plant, with an estimated capacity of approximately
850 MW, designated for construction on land adjacent to OPC’s Hadera power plant (the “Hadera Expansion Project”)
and (ii) an engineering, procurement and construction (EPC) agreement for the Hadera Expansion Project’s construction (the “EPC
Agreement”). OPC announced that subject to the terms of the project agreements and receipt of relevant permits, it intends to
seek tariff approval from the Israeli Electricity Authority in accordance with the regulatory framework applicable to the Hadera Expansion
Project. Set forth below is a description of the Finance Agreement and EPC Agreement as announced by OPC.
The Finance Agreement was entered into with Bank
Leumi le-Israel B.M. for a NIS-denominated loan equivalent to approximately $1.7 billion. The interest rate on the loan is equal
to the prime interest rate, plus a spread ranging from 0% to 0.7%. Interest shall accrue and will be payable quarterly from six years
from the drawdown date. The initial term of the loan is six years from the first drawdown date. During the construction period, the loan
will be repayable subject to payment of customary prepayment penalties and costs, and in the period following the commercial operation
date, the loan will be repayable without early repayment penalties and costs. The loan term may be extended for an additional period of
up to four years, with final repayment no later than the end of the 10th year from the drawdown date. OPC expects the total senior debt
to comprise approximately 80% of the total construction costs.
The Finance Agreement is supported by a shareholders’
guarantee from OPC Holdings Israel Ltd. (in which OPC holds an 80% interest) of the borrower’s undertakings, including the undertaking
to provide the equity for the Hadera Expansion Project. The borrower will also provide collateral as is customary, including a pledge
over all of its assets and rights, primarily the power plant, generation licenses and tariff approval, bank accounts, the project’s
land plots, rights under the various project agreements and related rights. The shares and related rights, including in respect of shareholder
loans and capital notes, have also been pledged as part of the collateral.
The terms of the Finance Agreement also include
additional committed facilities including a VAT facility for approximately $41 million and the extension of an uncommitted hedging facility
estimated at $60 million.
The Finance Agreement includes covenants and events
of default, including the following financial covenants: (i) during the construction period, a minimum loan life coverage ratio of 1.05x
for a capital injection by the shareholders (where failure to inject such capital will constitute a breach); and (ii) during the operation
period, compliance by OPC with certain financial covenants.
The Finance Agreement is subject to conditions
precedent, including obtaining tariff approval from the Israeli Electricity Authority, the acceptance and timing of which are uncertain.
The Finance Agreement is also subject to additional terms and conditions, and contains undertakings, representations and acceleration
provisions, as are customary in agreements of this type in Israel.
The
construction contractor under the EPC Agreement is a joint venture of a global EPC contractor and a local contractor (the “Contractor”).
In accordance with the EPC Agreement, the Contractor has undertaken to perform the EPC work for the Hadera Expansion Project, under a
turnkey, lump-sum format, in accordance with milestones, terms and conditions, and dates set by the parties.
The total consideration payable to the Contractor
under the EPC Agreement will be payable in installments, similar to the consideration payable under the agreement to supply the key equipment
for the Hadera Expansion Project (the “Key Equipment Supply Agreement”), which was also entered into with the Contractor.
The payments under both agreements will be made in accordance with milestones set forth in each of the agreements, which depend on the
progress of the Hadera Expansion Project through commercial operation. OPC expects the consideration for the EPC Agreement and the Key
Equipment Supply Agreement to constitute approximately 60% of the total estimated construction cost for the Hadera Expansion Project,
which is estimated at approximately $1.7 billion – $1.8 billion. Under the EPC Agreement, completion of construction is scheduled
for 2030.
The EPC Agreement includes standard terms and
conditions and other undertakings, as is customary in such agreements.
For further information on the Hadera Expansion
Project, see Kenon’s Reports on Form 6-K furnished to the U.S. Securities and Exchange Commission on May 21, 2026, May 20, 2026,
March 2, 2026, November 19, 2025 and August 11, 2025.
Caution Concerning Forward-Looking Statements
This press release includes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements
by words or phrases such as “may,” “will,” “expect,” “estimate,” “intend,”
“plan,” “believe,” “likely to,” “should,” or other similar expressions. These statements
include statements relating to the Hadera Expansion Project, the Finance Agreement and the EPC Agreement, including the scheduled completion
of construction, the expected terms and conditions of agreements, the capacity and characteristics of the Hadera Expansion Project, and
other non-historical statements. These forward-looking 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 which could cause the
actual results to differ materially from those indicated in Kenon’s forward-looking statements. Such risks include risks relating
to receipt of permits, scope of the relevant regulatory framework, completion of construction work, final costs of construction, equipment
and purchase of rights to land, the state of the equipment, force majeure events and/or the terms of engagements with key suppliers, the
final terms and conditions of which are uncertain, technical, operational and/or other delays and/or malfunctions and/or increase in costs
and/or other changes, the occurrence of one or more of the risk factors to which OPC is exposed, including construction risks (including
“force majeure” events, and regional security conditions), regulatory and permit-related risks, delays/faults in executing
construction work, delays and higher costs associated with supply chains, factors associated with key suppliers and finance costs and
other risks, including those set forth under the heading “Risk Factors” in Kenon’s most recent Annual Report on Form
20-F filed with the U.S. Securities and Exchange Commission. 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.
