Kibbutz Seeks to Sell Stake in Electotherm Group Amid Owner Dispute

Kibbutz Neot Mordechai, holding a 28% stake in the Electotherm Group, has filed a lawsuit with the Tel Aviv District Court demanding that controlling shareholder Yair Weinberger buy out its shares for 17.4 million shekels. The kibbutz initially purchased its shares in December 2016 for 14.7 million shekels and seeks to sell them back at that price plus interest and linkage.

Electotherm Group specializes in the manufacturing, repair, and maintenance of industrial furnaces and heating systems, operating both in Israel and abroad. The kibbutz claims it was misled by Weinberger's business plan, which projected significant growth and profits, promising at least a third of profits would be distributed as dividends. However, the kibbutz states it has only received one dividend payment of 200,000 shekels.

The kibbutz alleges that Weinberger, who serves as chairman, mismanages the company for personal gain, prioritizing his and his family's interests over the company's. They claim he draws a substantial salary of 60,000 shekels gross per month, plus bonuses, despite not actively managing the company for years. This salary, they argue, functions as a disguised dividend, particularly given the company's poor financial performance and the kibbutz's halted loan repayments.

Furthermore, the kibbutz accuses Weinberger of hindering potential investors, exhibiting poor corporate governance, and a lack of transparency. Serious incidents, including a complaint of verbal sexual harassment and bullying by Weinberger against a long-term female employee, and oversight failures leading to the dismissal of financial officers due to irregularities, are cited as evidence of a breakdown in control mechanisms. The kibbutz asserts that separation is now unavoidable under these circumstances.