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Gazit Seeks Changes at Ormat on Management Failures

Gazit Inc., the second-biggest shareholder in Ormat Industries Ltd., is seeking changes to the board of the geothermal-plant operator after the shares were removed from Israel’s benchmark stock index yesterday.

“This may be the beginning of a struggle for control between the main stake holders and Gazit,” said Guil Bashan, a Tel Aviv-based analyst at IBI. Bronitzki Investments Ltd. is the largest shareholder in Ormat, owning 35.1 percent, while Gazit holds a 15.2 percent stake, according to data compiled by Bloomberg.

Gazit owns 18 million Ormat shares, including 75,000 it bought for 4.3 million shekels ($1.1 million) in December 2007. That’s 57.3 shekels per share, according to Bloomberg calculations. Ormat dropped 3.3 percent to 27.94 shekels at the close in Tel Aviv, bringing the market value to 3.32 billion shekels, no longer among the 25 largest in Tel Aviv. The Yavne, Israel-based company’s first-quarter earnings fell 18 percent from the year-earlier period.

“The board of Ormat and management failed to address significant issues,” Gazit said in a statement to the bourse today. The issues include submitting a multiyear operating plan, appointing local management for its U.S. subsidiary Ormat Technologies Inc. and dealing with the regulatory environment and Ormat’s competitive standing, it said.

Gazit asked for an extraordinary shareholders meeting to elect two new members to Ormat’s board.

Ormat wasn’t immediately available to comment, when contacted by Bloomberg News today.

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