By Yoram Gabison

The Bronickis have reached an agreement to share control over the Ormat geothermal energy group, which the family founded, with the First Israel Mezzanine Fund. The Bronickis own 35.3% of Ormat Industries, parent of Ormat Technologies, while FIMI has built up a 10.5% stake. Ormat Technologies is the operational arm that builds and runs geothermal power plants around the world.

The agreement between the Bronickis and FIMI is contingent on the approval of Bank Hapoalim, which has attachments to all the Ormat Industries shares the Bronickis own, after the family borrowed heavily from the bank to stave off a hostile takeover attempt by the Gazit group last year.
bronicki – Ofer Vaknin – November 23 2011

Dtia Bronicki
Photo by: Ofer Vaknin

Hapoalim lent the Bronickis NIS 600 million in December 2007, which they used to buy more shares in the company – a 7.6% stake – to fend off the Gazit group.

The present value of the Bronickis’ stake in the company is NIS 902 million. According to the understandings achieved with FIMI, which is run by Ishay Davidi, the Bronickis will sell FIMI 14 million shares – 12% of the company’s stock – for NIS 24 each. The price confers a premium of 11% to Ormat Industries’ opening share price yesterday. FIMI will therefore pay NIS 340 million. The Bronickis will use that money to repay just over half the loan to Bank Hapoalim, which comes due next month. The family is working on rescheduling repayment of the rest.

Earlier this month FIMI reached a six-month voting agreement with institutional investors belonging to the Phoenix insurance company. The investors assigned their voting rights, conferred by the 3.3 million shares they own (2.75% of Ormat Industries’ stock ), to FIMI. The agreement increases FIMI’s voting rights to 13.3%. Also, if FIMI decides to sell its Ormat stock, the Phoenix institutionals get to piggyback on the deal.

FIMI has a similar agreement with the Gazit group, which owns 10.95% of Ormat’s stock.

Ormat was founded in Yavneh in 1965 under the name Ormat Turbines by Lucien Yehuda Bronicki, today the company’s chairman, and his wife Dita Bronicki, who took over the management.