Ormat executives meet with critical shareholder group in Israel

Steamboat Springs plant of Ormat, Nevada (source: Commons/ Wikimedia)
Alexander Richter 10 Jul 2010

Ormat executives met recently with executives of Gazit, an Israeli group which has been buying a large stake in Ormat Industries listed on the Tel Aviv Stock Exchange, the mother company of Ormat Technologies (listed at NYSE), to resolve differences.

In a struggle that has been going on for some time, “top executives of the Ormat energy group and the Gazit real estate empire (which has been buying up stock in Ormat since 2008) met (…), but failed to resolve their differences. Ormat Industries was represented by controlling shareholders Dita Bronicki and her son Yoram Bronicki. Gazit was represented by Dori Segal, a controlling shareholder of Gazit Inc., which owns 15% of Ormat. The meeting was held at Ormat’s headquarters in Yavneh.

Ormat, which builds and runs geothermal power plants, said after the meeting that it would study the clarifications provided yesterday by Gazit to an announcement it submitted to the Tel Aviv Stock Exchange a week ago. In its announcement Gazit expressed opposition to the reappointment to a second term of two external directors on Ormat’s board and concern about the Bronickis’ involvement in running the company.

The company also issued a detailed response to Gazit’s announcement. Ormat said that, contrary to Gazit’s claims, Ormat showed a steady rise in profits and revenues at a time when the markets were in deep crisis.

It also rejected Gazit’s explanation for the fall in Ormat’s share price. Gazit attributed the drop to poor management and corporate performance. Ormat said the drop came after Gazit bought up Ormat stock, causing a steep rise in the share price, and then stopped his purchases of the stock.

Ormat Industries is a holding company, while actual operations are carried out by its subsidiary, Ormat Technologies. While Gazit claims Ormat Industries has been twiddling its thumbs, the Bronickis counter that the group’s efforts to find geothermal energy sources are unmatched in the industry.

The company also rejects Gazit’s criticism of how it has handled investors. Ormat claims it is in fact transparent in its dealings and has openly disclosed the challenges the company is facing.

Ormat says that despite various technical problems its generating capacity grew by 14% in 2009 and will grow this year as well.

Gazit Inc. said in response that it is surprised by Ormat’s statement in light of yesterday’s meeting, and would respond specifically to the statement after reviewing it.

Gazit also provided data showing that Gazit Inc. stock produced an 884% return over the past 10 years and that its subsidiary Gazit Globe had a 503% return, whereas Ormat Industries had a 159% return during the same period.

Ormat Industries shares fell half a percent on turnover of NIS 5.2 million yesterday. On the other hand, over on Wall Street, in late afternoon, shares of subsidiary Ormat Technologies were up 1.6%.”

Source: Haaretz