Capital Market Authority against Mor and Katzman: Orion meeting convenes to elect directors

The shareholders' meeting of the real estate company Orion will convene today to vote on the composition of the board of directors, with a regulatory shadow hanging over the vote. In the direct struggle between the investment house Mor Gemel, which is trying to appoint four directors on its behalf to shake up the company that was spun off from G City, and the Haim Katzman camp (Norstar), the Capital Market Authority has entered the picture in an unusual move.

In a sharp letter sent by the Authority's chairman Amit Gal to Mor, it was hinted that the institutional body is exceeding its financial role and trying to take over the management of the company, a move that casts doubt on the involvement and throws the entire vote into a tailspin. The four directors are Yossi Zeituni and Yishai Sasson, as well as the owners of the HaBaita Living company, Ariel Prestman and Yoav Karmi. HaBaita operates in the real estate sector in Central and Eastern Europe, including the Poland region, where Orion is active, whose holdings are three former G City assets in the country. These were spun off to reduce G City's leverage.

Gal hinted in a letter sent to Mor last week that the investment house is exceeding its role of managing members' funds and is trying to manage the company through the appointment of directors. Mor, for its part, claimed that it wants to shake up a company whose stock has lost 35% of its value since it was spun off in December. In addition, Mor is interested in checking whether CEO Dina Ben-Ari is suitable for the position. Mor purchased most of its shares in an Orion share offering in June of this year, in which the company raised 77 million shekels in shares and options.

A day before the offering, it turns out, Karmi and Prestman were already put up for election, as HaBaita already held 7% of Orion. The shareholders' meeting then voted against their election. Today's vote, on the same directors, will take place just two months after they failed to be appointed. Besides Mor, the only institutional investor that holds Orion shares is the investment house Analyst, which in that vote voted against the entry of the two into the board of directors. The question is whether it will change its vote today.

Norstar, controlled by Katzman, which holds 15.7% of Orion's shares, is expected to oppose the election. Norstar will support the election of chairman Eran Yaacov, former head of the Tax Authority, incoming G City CEO Keren Khalifa, and former Harel investment manager Sami Babakov. If Mor decides to participate in the vote, it will be interesting to follow its vote also regarding the approval of the three.

The Authority wrote to Mor, among other things, that "a concern arises that the scope and nature of Mor's involvement in the companies it holds exceeds what is expected of an institutional body investing for its members and may amount to involvement in management or exercising influence that is not consistent with the restrictions applicable to the institutional body." The Authority forwarded a series of questions to Mor, some of which the investment house did not answer or answered partially. The Authority is examining measures against Mor if its answers are not satisfactory, including an obligation to sell the position in the company or fines.