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United States securities and exchange commission logo
August 22, 2022
Gilad Yavetz
Chief Executive Officer and Director
Enlight Renewable Energy Ltd.
13 Amal St. Afek Industrial Park,
Rosh Ha ayin, Israel
Re: Enlight Renewable
Energy Ltd.
Draft Registration
Statement on Form F-1
Submitted July 25,
2022
CIK No. 0001922641
Dear Mr. Yavetz:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1 submitted July 25, 2022
Prospectus Summary
Overview, page 1
1. We note your disclosure
in Figure 1 of Total Segment Revenue, which includes proceeds
recognized as repayment
of a contract asset accounted for under IFRIC 12, per disclosure
on page F-83. As such,
it appears that disclosure of Total Segment Revenue represents a
non-IFRS measure.
Please revise to remove the measure or identify the measure as a non-
IFRS financial measure
and include the disclosures required by Item 10(e) of Regulation
S-K. We note Total
Segment Revenue is also presented in Segment information disclosure
beginning on page 72.
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 2 22, 2022 Page 2
FirstName LastName
2. We note your disclosure that you are a global renewable energy
platform and that
you develop, finance, construct, own, and operate utility-scale
renewable energy projects.
Please revise the summary disclosure here to briefly describe how you
generate revenues.
3. We note your statement that your operational projects generated an
annualized
consolidated return on invested capital of 11.6% as of March 31, 2022.
Please revise to
provide disclosure consistent with SEC Release No. 33-10751, such as
context for an
investor to understand this metric.
4. We note your statement that over the last five years, "Enlight s
share price has increased
by approximately 480%, outperforming S&P Renewables index by more than
350%."
Please revise to include balancing disclosure here to clarify that the
competitors' business
operations may differ from yours and that your future results may also
be different from
your prior results.
5. Please provide support for your statements of belief that 1) your
global platform includes
some of the largest onshore wind and solar projects across Western
Europe, central and
eastern Europe and Israel; and that 2) Cl nera is a market leader in
the Mountain West
region of the United States, pioneering some of the largest renewable
energy projects in
the region.
6. Given your multi-jurisdictional operations, please consider including
a
corporate organizational chart.
Summary consolidated financial and other data
Segment information, page 17
7. We note your statement that you evaluate segment operating performance
using Segment
Revenue and Segment Adjusted EBITDA. However, IFRS 8 allows for only
one measure
of segment profitability. Therefore, disclosure of Segment Revenue
appears to represent a
non-IFRS measure. Please revise to remove the measure or identify the
measure as a non-
IFRS financial measure and include the disclosures required by Item
10(e) of Regulation
S-K. We note Segment Revenue is also presented in Segment information
disclosure
beginning on page 72.
General business risks
We depend on certain Operational Projects for a substantial portion of our cash
flows, page 31
8. We note your disclosure that your largest Operational Project,
Blacksmith, accounted for
approximately 33% of your revenue and 25% of your Total Segment
Revenue for the year
ending December 31, 2021; and that the impairment or loss of any one
or more of the
projects in your operating portfolio, such as Blacksmith, could
materially and
disproportionately reduce your total energy generation and cash flows
and, as a result,
have a material adverse effect on your business, financial condition
and results of
operations. We further note your disclosure that, under the terms of
certain of your offtake
contracts, your projects delivery of electricity is subject to
curtailment or other
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 3 22, 2022 Page 3
FirstName LastName
restrictions, and that the government of Serbia partially curtailed
offtake from project
Blacksmith in 2020. Please file as exhibits any written offtake
agreements related to the
Blacksmith project, as well as any other projects upon which you are
substantially
dependent, or advise us why you do not believe you are required to do
so. Refer to
Item 601(b)(10)(ii)(B) of Regulation S-K, as contemplated by Item 8 of
Form F-1.
Risk Factors
Cost inflation could adversely affect our business and results of operations,
page 33
9. We note your risk factor indicating that inflation could adversely
affect your costs of land,
raw materials and labor, and other goods and services needed to
construct your projects,
which could potentially reduce project profitability. Please update
this risk factor if recent
inflationary pressures have materially impacted your operations. In
this regard, identify
the types of inflationary pressures you are facing and how your
business has been
affected.
Risk Factors
Our amended and restated articles of association to be effective upon the
closing of this offering,
page 53
10. We note your disclosure that your amended and restated articles of
association will
provide that, unless you consent in writing to the selection of an
alternative forum, the
federal district courts of the United States shall be the exclusive
forum for the resolution
of any claims arising under the Securities Act (the "Federal Forum
Provision"). In that
regard, we note that Section 22 of the Securities Act creates
concurrent jurisdiction for
federal and state courts over all suits brought to enforce any duty or
liability created by the
Securities Act or the rules and regulations thereunder. As such,
please revise your risk
factor to state that there is uncertainty as to whether a court would
enforce your Federal
Forum Provision, and that investors cannot waive compliance with the
federal securities
laws and the rules and regulations thereunder. To the extent relevant,
please similarly
revise your risk factor at page 56, concerning the competent courts of
Tel Aviv, Israel as
the exclusive forum for derivative actions, to address any questions
concerning enforceability.
Use of Proceeds, page 59
11. We note your disclosure that you intend to use the net proceeds from
the offering for the
development and construction of your project portfolio, working
capital purposes and
general corporate purposes; and that you may also use a portion of the
proceeds to acquire
or invest in businesses, although you do not have agreements or
commitments for any
material acquisitions or investments at this time. Please revise to
more specifically
identify the principal intended uses of the net proceeds and provide
the estimated amounts
you intend to allocate to each identified purpose. If you do not have
a current specific plan
for the proceeds of this offering, please state this explicitly and
discuss the principal
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 4 22, 2022 Page 4
FirstName LastName
reasons for the offering. Refer to Item 3.C.1 of Form 20-F.
Supply chain disruptions, page 65
12. We note your disclosure regarding supply chain disruptions. Please
discuss whether the
disruptions materially affect your outlook or business goals, and
specify whether
they have materially impacted your results of operations or capital
resources. Quantify, to
the extent possible, how your sales, profits, and/or liquidity have
been impacted. Please
also discuss known trends or uncertainties resulting from mitigation
efforts undertaken, if
any, and explain whether any mitigation efforts introduce new material
risks.
Additionally, please file as exhibits to your registration statement
your agreements with
the suppliers upon which your business is substantially dependent.
Management's discussion and analysis of financial condition and results of
operations
Components of statements of operations
Project development expenses, page 67
13. We note disclosure here regarding the nature of project development
expenses and when
such costs would be expensed versus capitalized. Please clarify
whether this policy is the
same described in Note 2(I) for Deferred costs in respect of projects.
If true, it appears that
the accounting policy footnote should be expanded to address the
criteria described here.
Supplementally, please tell us the accounting guidance you have relied
on to support your
capitalization policy for project development expenses.
Results of operations
Comparison of the years ended December 31, 2020 and 2021, page 70
14. Please revise the discussion and analysis of operating results where
the financial
statements reflect material changes from period-to-period in one or
more line items,
including where material changes within a line item offset one
another, to describe the
underlying reasons for these material changes in quantitative and
qualitative terms. Refer
to Item 5 of Form 20-F. For example, we note the increase in selling,
general and
administrative expenses on page 72 is attributed to employee salaries
and advisory fees.
As another example, the explanation for the increase in Central and
Eastern Europe
segment revenue on page 74 refers to the commercial operation of
project Selac in
Kosovo and expiration of COVID-19-related curtailment at project
Blacksmith in Serbia.
Also, please clarify your disclosure on page 74 to explain the nature
of the changes in
production at your Israeli solar facilities that resulted in increased
segment revenue.
Non-IFRS financial measures, page 75
15. Your presentation of Total Segment Adjusted EBITDA in any context
other than
the IFRS 8 required reconciliation in Note 28 is considered the
presentation of a non-
IFRS measure. Please revise to remove the measure or identify the
measure as a non-
IFRS financial measure and include the disclosures required by Item
10(e) of Regulation
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 5 22, 2022 Page 5
FirstName LastName
S-K. Refer to Question 104.04 of the Compliance and Disclosure
Interpretations related to
Non-GAAP measures.
16. In light of the above comment, it does not appear that you have
reconciled FFO to the
most directly comparable IFRS basis measure. Please revise your
reconciliation
accordingly.
Liquidity and capital resources, page 76
17. We note your discussion of how you finance the construction of your
projects and how
you fund your day-to-day operations. Please expand your discussion to
analyze material
cash requirements from known contractual and other obligations, and
information
regarding commitments for capital expenditures. Such disclosures
should specify the type
of obligation and the relevant time period for the related cash
requirements. In addition,
include a statement by the company that, in its opinion, the working
capital is sufficient
for the company s present requirements, or, if not, how it proposes
to provide the
additional working capital needed. Refer to Item 5.B of Form 20-F.
Management's discussion and analysis of financial condition and results of
operations
Financing the construction of our projects, page 77
18. Please describe the material terms of your material contracts and file
such as exhibits with
your registration statement. In this regard, please file as exhibits
your debentures, project
financing agreements, and credit facility agreements with Bank
Hapoalim Ltd. and Bank
Leumi Le-Israel Ltd. or advise us why you do not believe you are
required to do so. Refer
to Item 601(b)(10) of Regulation S-K, as contemplated by Item 8 of
Form F-1.
Project finance, page 78
19. We note the disclosure that as of December 31, 2021, you had
approximately $1.3 billion
of project finance debt outstanding, all in connection to projects in
Europe and in
Israel. Please disclose the material terms of your project finance
debt here. In this regard,
please enhance your disclosures and update the discussion at pages 103
- 104 accordingly.
Operating activities, page 83
20. Please provide a more robust analysis of the changes in cash flows
provided by or used in
operating activities. Your analysis should quantify all factors cited
and address the
material drivers underlying those factors. Please note that merely
citing changes in
working capital items and other items identified in the statement of
cash flows may not
provide a sufficient basis to understand how and why operating cash
between comparative
periods changed. Refer to Item 5.B of Form 20-F, including the
instructions, and Section
IV.B.1 of SEC Release No. 33-8350.
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 6 22, 2022 Page 6
FirstName LastName
Business
Our business model: control over the entire project life cycle, page 89
21. We note your statement that for your Gecama project in Spain, you were
able to secure
50% non-recourse financing solely on a merchant basis. Please revise
to explain what is
meant by merchant basis.
Principal shareholders, page 136
22. Please expand your footnotes to disclose the natural person(s)
with voting and investment power over the shares held by each of the
entities in your
table.
Certain relationships and related party transactions
Agreements with directors and executive officers
Employment agreements, page 138
23. We note your disclosure that you have entered into written employment
agreements with
each of your executive officers. Please update your exhibit index to
include these
agreements as required by Item 601(b)(10) of Regulation S-K, as
contemplated by Item 8
of Form F-1. In the alternative, please tell us if these agreements
are not required to be
publicly filed in your home country, are not otherwise publicly
disclosed, and therefore
are not required to be filed.
Share Capital, page 139
24. Please disclose the portion of each class of securities held in the
United States and the
number of record holders in the United States. Refer to Item 4 of Form
F-1 and Item 7.A.2
of Form 20-F.
A. Statement of compliance with international financial reporting standards
(IFRS), page F-13
25. Please revise to state definitively that your consolidated financial
statements have been
prepared in accordance with International Financial Reporting
Standards as Issued by the
IASB. Refer to Item 17(c) of Form 20-F.
Notes to the financial statements as of December 31, 2021
Note 2 - Significant accounting policies
General, page F-13
26. Please add disclosure of your accounting policy for the line titled
Asset retirement
obligation or tell us why you do not believe such disclosure is
necessary. Refer to IAS
1.117.
Q. revenue recognition, page F-27
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 7 22, 2022 Page 7
FirstName LastName
27. It appears from your disclosure here and in Note 21 that you have
identified three distinct
performance obligations. Please revise to provide a description of i)
when you typically
satisfy your performance obligations and ii) the significant payment
terms associated with
your performance obligations. Refer to IFRS 15.119(a) and (b). In
addition, please tell us
where you have addressed the following policy disclosure requirements
or revise as
necessary:
Information necessary to understand your remaining performance
obligations (IFRS
15.120-122);
The judgments and changes in the judgments you made in applying
IFRS 15 (IFRS
15.123);
How you determine the timing of satisfaction of performance
obligations (IFRS
15.124-125); and
Information about the methods, inputs and assumptions used in
determining the
transaction price and the amounts allocated to performance
obligations (IFRS
15.126).
Note 8 - Investments in investee entities
C. Investment in associate entities, page F-43
28. We note you identify a number of associate entities as of December 31,
2021 with an
effective state in equity interests. As such, please revise to
explain why the balance for
Investments in equity accounted investees is $0 on the
consolidated statements of
financial position as of December 31, 2021. As part of your revision,
clarify the nature of
the balance for Loans to investee companies of $26,264 and
$43,717 for the periods
presented.
Note 9 - Contract assets in respect of concession arrangements, page F-44
29. We note you break-out your contract assets between current and
non-current on your
consolidated statements of financial position. However, it is
difficult to determine how
those balances relate to the disclosures in this table. Please revise
your presentation to
provide a rollforward of the opening and closing balances of your
contract assets and
provide an explanation of any significant changes in the balances
during the reporting
periods. Refer to IFRS 15.116-118.
Note 14 - Credit from banking corporations, financial institutions and other
credit providers
(4) Loans from other credit providers, page F-56
30. Please clarify how the loans from other credit providers described in
Note 14(4) are
reflected in the table on page F-48 and revise to explain the meaning
of a mezzanine
loan.
Gilad Yavetz
Enlight Renewable Energy Ltd.
August 22, 2022
Page 8
Note 15 - Debentures, page F-57
31. We note you issued Series C convertible debentures in July 2021.
Please expand your
disclosure to clarify how you accounted for the conversion features
identified in your
disclosure. To this end, we note an equity component of $10,405
reflected in the statement
on page F-7. However, it is not clear whether there was a derivative
liability component as
well.
A. Registered capital, page F-67
32. Please revise to clarify the difference between the ordinary shares,
which amounted to
18,000,000 as of December 31, 2021 versus the fully paid-up ordinary
shares, which
amounted to 925.1M.
Note 18 - Share capital
General - Capital reserves, page F-67
33. Please tell us how you have addressed the requirement to present a
reconciliation between
the carrying amount at the beginning and the end of the period
separately for Capital
reserves. To this end, we note the individual components comprising
Capital reserves in
the consolidated statements of changes in equity on pages F-7 and F-8.
However, it is not
clear how the six different columns relate to the line item titled
Capital reserves on the
balance sheet.
Note 27 - Financial instruments
C. Fair value, page F-81
34. We note the line titled Financial assets measured at fair value
through profit or loss in
the tables on page F-81. Please tell us your consideration of
presenting this line by class of
financial instrument. In this regard, showing separately those
designated as such upon
initial recognition or subsequently in accordance with paragraph 6.7.1
of IFRS 9 and those
mandatorily measured at fair value through profit or loss in
accordance with IFRS 9. Refer
to IFRS 7.6 and 7.8(a). As part of your response, clarify where the
Contracts in respect of
forward transactions and Interest rate swaps are presented in
your consolidated
statements of financial position.
Note 28 - Operating segments, page F-82
35. We note you have not reported a measure of total assets and liabilities
for each reportable
FirstName LastNameGilad Yavetz
segment, or any of the other amounts specified in IFRS 8.23. Please
supplementally
Comapany NameEnlight
confirm Renewable
to us that such Energy
measures Ltd.regularly provided to the
chief operating decision
are not
Augustmaker or revise
22, 2022 Page 8your disclosure as necessary.
FirstName LastName
Gilad Yavetz
FirstName LastNameGilad Yavetz
Enlight Renewable Energy Ltd.
Comapany
August 22, NameEnlight
2022 Renewable Energy Ltd.
August
Page 9 22, 2022 Page 9
FirstName LastName
General
36. We note that your reporting currency is the U.S. dollar and that in
disclosures throughout
your submission, you present financial information in a transaction
currency only, such as
EUR, NIS, HUF, HRK, etc. To aid investor understanding, please revise
the disclosures in
your submission to present amounts in U.S. dollars or present the
translated U.S. dollar
amount parenthetically. In addition, where applicable, revise to
include disclosure that
identifies the currencies represented by HUF, HRK and an agorot.
37. You refer to reports published by BloombergNEF (BNEF) and the Western
Electricity
Coordinating Council (WECC) for market and industry statistics. Please
disclose the title
and date of publication of each report. Please also tell us whether
the information is
publicly available.
38. Please provide us with supplemental copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
have presented or expect to present to potential investors in reliance
on Section 5(d) of the
Securities Act, whether or not you retained, or intend to retain,
copies of those
communications.
You may contact Jennifer O'Brien, Staff Accountant, at (202) 551-3721 or
Kimberly
Calder, Assistant Chief Accountant, at (202) 551-3701 if you have questions
regarding
comments on the financial statements and related matters. Please contact Liz
Packebusch, Staff
Attorney, at (202) 551-8749 or Loan Lauren Nguyen, Legal Branch Chief, at (202)
551-
3642 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Energy
& Transportation
cc: Joshua G. Kiernan