Ormat Industries Ltd. (TASE: ORMT) founders Judith and Yehuda (Lucien) Bronicki are seeking sources of finance to repay the NIS 600 million loan they took from Bank Hapoalim to buy 7.6% of Ormat. The huge debt was incurred in late 2007, at the height of the challenge from Gazit Inc. (TASE: GZIT), controlled by Chaim Katzman and Dori Segal, to the couple's control of Ormat.
Up to now, the Bronicki's have met the interest payments, but the capital falls due at the end of the year. As far as is known, the couple does not have this kind of sum available, and they are therefore actively seeking finance.
One of the possibilities being examined is that Ishay Davidi's private equity fund FIMI will become a white knight, and provide finance that will replace the loan from bank Hapoalim. If that happens, the fund will likely demand an option to invest in Ormat shares.
The amount of finance being talked about from FIMI is some $100 million. Another, less likely, possibility, given the decline in Ormat's share price in the past two years, is that FIMI will buy some of the Bronickis' shares in Ormat immediately.
FIMI has been examining the possibility of an investment in Ormat in the past few months. Ormat's business is in alternative energy, a field that the fund has identified as interesting. Talks are taking place between the fund and the Bronicki family, but it is not clear whether they will mature into a deal.
In any event, any deal between the two sides will require approval from Bank Hapoalim, which has a lien on the Bronicki couple's entire holding in Ormat (35.1%). As far as is known, the bank is not involved in the negotiations, but it is believed on the market than Bank Hapoalim sees FIMI as a serious player.
As mentioned, the Bronickis took the loan to consolidate their control of the company, after Gazit Inc became a party at interest in it in June 2007, altogether buying Ormat shares to the tune of NIS 1.3 billion, and reaching a 20% stake, part of which has since been sold.
Ormat has a market cap on the Tel Aviv Stock exchange of NIS 2.3 billion, and it holds 60% of Ormat Technologies, traded on the New York Stock Exchange at a market cap of $1.02 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on June 9, 2011
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