Geothermal energy developer Ormat Industries Ltd. (TASE: ORMT) controlling shareholders, CEO Yehudit Bronicki and her husband, chairman and CTO Yehuda Bronicki, have put up their entire 35.2% holding in the company as collateral under the new terms for the loan they took from Bank Hapoalim (TASE: POLI; LSE:80OA) in late 2007. Sources inform ''Globes'' that the bank agreed in exchange to forego its margin call option on the shares, which would have allowed it to demand more collateral from the Bronickis or to demand immediate repayment of the loan in whole or in part.
In 2007, Gazit Inc. (TASE: GZIT), controlled by chairman Chaim Katzman, launched a hostile takeover attempt of Ormat by buying up shares on the market. Gazit reached a 17% holding in the company, while the Bronickis' owned 28% through Bronicki Investments Ltd. and personally. To block the takeover attempt of the company they had founded, they took a $150 million loan from Bank Hapoalim, and used the proceeds to purchase an additional 7.6% of the company's shares.
The Bronickis put up part of their holding in Ormat as collateral for the loan in favor of Bank Hapoalim Trust Company. The Bronickis bought the additional shares at nearly double the current share price, and the drop in the share price in recent months gave the bank the right to demand that the Bronickis either reduce the outstanding balance of the loan, or provide more collateral.
Under the original loan agreement, the Bronickis put up as collateral 24.8 million Ormat shares, which were worth $135 million when Ormat's share fell to a low point of NIS 22 in late December 2008. To avoid Bank Hapoalim recalling its loan, the Bronickis renegotiated the loan agreement. Under the new loan agreement, they put up as collateral an additional 16.6 million Ormat shares, their entire holding in the company.
Ormat is currently traded at around NIS 31, giving a market cap of NIS 3.71 billion. The current value of the collateral is therefore $325 million.
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2009
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