www.bethelfinance.com
First Israel Mezzanine Investors Fund (FIMI), run by Ishai Davidi, is continuing its effort to gain control of geothermal company Ormat Industries Ltd. (TASE: ORMT) from chairman Yehuda and CEO Yehudit Bronicki. FIMI and The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), which owns 2.7% of Ormat, today signed an agreement to vote together at general shareholder meetings. The agreement comes after FIMI unit FIMI 2007 Ltd. increased its stake in Ormat to 10.53%.
Last month FIMI bought 4.21% of Ormat from Norstar Holdings Inc. (TASE: NSTR), controlled by chairman Chaim Katzman. The sale reduced Norstar's stake in Ormat to 10.95%, making it the second largest shareholder in the company.
FIMI and Norstar also signed a price supplement mechanism, under which if FIMI sells the shares it bought from Norstar above a predetermined threshold, Norstar will receive the extra proceeds, and each party will give the other tag-along rights in a sale of Ormat shares.
In effect, FIMI now heads a consortium that owns 24.2% of the voting rights in Ormat.
FIMI's latest moves come after talks last year on a loan to Ormat's founders broke down without a deal over a disagreement on the price. The Bronickis needed cash to repay a NIS 600 million loan taken from Bank Hapoalim (TASE: POLI) to fend off a hostile takeover attempt by Katzman several years ago through Gazit Inc. (now Norstar). The Bronickis bought back shares at peak prices, reaching a 35.1% controlling stake in their company.
In two months, the Bronickis have to make the first payment on the loan principle. To do so, they will either have to reach a joint control agreement with FIMI, under which they will sell it some of their shares in Ormat, or they will have to strike a deal with Bank Hapoalim to postpone the payment, and wait for the Ormat share price to rise before selling shares. Alternatively, the Bronickis could find a third party to buy shares. Talks on such a deal with Shari Arison-controlled Shikun u'Binui Holdings Ltd. (TASE: SKBN) broke down.
Ormat's share price rose 3.4% today to NIS 23, giving a market cap of NIS 2.7 billion.
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