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"Gazit Inc., controlled by Chaim Katzman, concealed from the public its takeover attempt of Ormat Industries Ltd. (TASE: ORMT), and bought shares from the public, enriching itself by more than NIS 365 million at the expense of investors," contends a derived lawsuit filed with the Tel Aviv Economic Affairs Court against Gazit, (now Norstar Holdings Inc. (TASE: NSTR)), and subsidiary Gazit Israel.
The lawsuit was filed by Ormat shareholder Roman Altman, who is asking to be allowed to initiate legal action on behalf of the company against the respondents. He contends that the respondents' secret amassing of Ormat shares in the hostile takeover attempt from the Bronicki family involved the illegal use of insider information.
"Disclosure of Gazit's intentions in real time would have caused an immediate rise in the share price, and forced Gazit to buy the shares at a higher price. Under these circumstances, every investor who sold shares to Gazit would have received the full proceeds due him," contends the statement of claim. "Gazit's modus operandi concealed information about its intentions from shareholders, creating a significant information gap between the parties, allowing Gazit to buy shares at a lower price that did not reflect all the relevant data."
The lawsuit stated that, on June 12, 2007, Gazit Inc. (now Norstar) bought 5.8 million Ormat shares for NIS 283 million, giving Gazit a 4.92% stake in the company. On June 13, it bought an additional 3,455,000 Ormat shares at an average price of NIS 47.91 per share, for a total of NIS 405 million, and giving Gazit a 12.1% stake in Ormat. This holding required Gazit to make an immediate disclosure about its holding in Ormat, which, for the time, enabled the public to discover that it had become a party at interest in Ormat.
Between the publication of the immediate notice and the end of October 2007, Gazit increased its Ormat stake by another 31%. The petitioner contends that a comparison of the prices Gazit paid for the Ormat shares and the share price on October 31, 2007, shows that Gazit made NIS 282 million, and more than NIS 365 million including interest and linkage, from the illegal use of insider information. The petitioner contends that Gazit made a profit of NIS 82 million from the difference between the price at which it bought 12% of Ormat before the publication of the immediate notice on June 13, 2007, and Ormat's share price after the publication of the notice.
Norstar said in response, "The company has not yet received the statement of claim, but it appears to be a rehashing of contentions that have already been made and dismissed by Ormat, and in any case are completly denied by the company. Norstar will use all means at its disposal to protect its reputation and rights."
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