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Nevada Geothermal Power closes US$98.5m loan with 80% DOE guarantee

Blue Mountain Faulkner-1, geothermal power plant, Nevada (source: Nevada Geothermal Power)
Alexander Richter 7 Sep 2010

Nevada Geothermal Power closes US$98.5million loan for its Blue Mountin Faulkner 1 power plant with John Hancock Financial Services as lead lender and the U.S. Department of Energy as loan guarantor for 80% of the loan amount or US$78.8million.

In a release by the company, “Nevada Geothermal Power Inc. (TSX.V: NGP) announces that it has closed a US $98.5 million loan with John Hancock Financial Services as lead lender and the U.S. Department of Energy (DOE) as loan guarantor for 80 percent of the loan amount or US $78.8 million. The blended interest rate for the loan has been determined at 4.14%.

NGP is the first renewable power development company to complete a loan guarantee through the DOE’s Financial Institution Partnership Program (FIPP), an important initiative for clean energy supported by the 2009 American Recovery and Reinvestment Act. The loan was assigned a BB+ credit rating by Fitch Ratings Ltd., of New York.

“I’m pleased that Recovery Act financing is helping Nevada Geothermal Power to create jobs in northern Nevada and bringing us closer to energy independence,” said Senator Harry Reid.

Nevada Governor Jim Gibbons commented, “With Nevada’s goal of becoming a leader in geothermal energy production, it’s promising to see a company like NGP accelerate success through a strong relationships with senior financial institutions such as John Hancock and the Department of Energy Loan Programs Office. We know that they have a bright future ahead of them as they exhibit momentum and leadership in the development of renewable base load energy.”

The Faulkner 1 geothermal plant is currently producing 36-38 MW (net) and has a 20-year power purchase agreement with NV Energy. Humboldt County Administrator Bill Deist stated , “The Blue Mountain project has had a positive impact on our local economy and has been an excellent fit within the Winnemucca region. It has created important, long-term employment opportunities and is a win-win for everybody.”

NGP continues development work on the Faulkner 1 project in order to achieve its full power output capacity. “Closing the loan is a huge step for NGP, as it represents a major milestone in the development of the Blue Mountain project and of the company as a whole. NGP provides significant employment in Nevada and the Winnemucca area and we believe the Faulkner 1 project will provide a stable base for expanding employment opportunities as the Company embarks on additional development projects, ” said NGP President and Chief Executive Officer Brian Fairbank. “We appreciate the hard work and cooperation of our partners, the DOE, John Hancock, TCW and our financial advisors RLR Consultants and MC Capital Partners, throughout this process.”

John Hancock Financial Services is a leading institutional energy lender with experience in fixed rate utility lending, project financing and private equity investments, including prior geothermal financings. John C.S. Anderson, Head of Power & Infrastructure Finance at John Hancock stated, “John Hancock is very pleased that Blue Mountain is the first project to have closed a DOE loan guarantee through FIPP. We have been working very hard to develop FIPP financings over the last year, and are delighted that NGP is the first company to reach this impressive milestone. We are looking forward to supporting NGP in its future endeavors.”

Source: Company release via Financial Post