By Yoram Gabison

Shari Arison’s Shikun & Binui is negotiating to buy the controlling interest in Ormat Industries from the geothermal energy company’s founders, the Bronicki family.

Ormat Industries owns the controlling interest in Wall Street-listed Ormat Technologies, which is the operational arm of the renewable-energy group.
bronicki – Ofer Vaknin – July 8 2011

Yehudit Bronicki
Photo by: Ofer Vaknin

The Bronickis, who also manage the group, own 35% of Ormat Industries’ stock. They need cash to repay a NIS 600 million loan taken from Bank Hapoalim in December 2007 to ward off a perceived hostile takeover of the group by Gazit Inc., headed by Chaim Katzman and Dori Segal.

The Bronickis used the borrowed money to buy another 7.6% of Ormat to beef up their interest and fight off Gazit’s bid.

Industry insiders believe the Bronickis are negotiating to sell 20% of the group to Shikun & Binui (formerly known as Housing and Construction ) for NIS 28 per share. That would represent a 15% premium over Ormat Industries’ opening share price yesterday.

Since the start of June, Ormat Industries stock has gained 24%, fueled by reports that the Bronickis were negotiating to bring the First Israel Mezzanine Investors fund into the company as a partner. But FIMI, run by Ishay Davidi, stopped the negotiations, apparently due to a disagreement over price. FIMI reportedly declined to pay a 43% premium for Ormat’s shares. Part of that premium was based on the surmise that Ormat’s financial reports would improve with FIMI inside.

For the first quarter of 2011, Ormat Technologies, the operational subsidiary, reported revenues of $97.8 million, up from $82.7 million in the same period of 2010, and a net loss of $9 million, or 20 cents per share. In the same quarter of 2010, it had net profits of $1.8 million, or 4 cents per share. One problem this year was costs on the North Brawley plant in California, which weighed on results.