Ormat appoints John Hancock for DOE loan guarantee of up to US$300m
Ormat Technologies engages John Hancock to arrange senior secured construction and term loan facilities under the DOE loan guarantee program of up to US$330m for 3 geothermal projects in California and Nevada.
In a release, “Ormat Technologies, Inc. (NYSE: ORA) announced today that its subsidiary, Ormat Nevada Inc. has engaged John Hancock Life Insurance Company (U.S.A.) to arrange senior secured construction and term loan facilities under a DOE loan guarantee program of up to $330 million for three geothermal projects currently under construction in California and Nevada.
The three projects are the Mammoth CD-4 and Wister geothermal projects located in California and the Deadhorse Wells geothermal project located in Nevada. These projects are in various stages of development and PPA negotiations and collectively are expected to generate between 80 and 90 MW that are scheduled to come on line during 2013. The three projects will utilize Ormat’s proprietary OEC technology, which is installed in over 1,300 MW of geothermal power plants and other electricity generating systems around the world.
The term sheet contemplates that, subject to final documentation, proceeds of the credit facilities will be drawn against milestones during the construction period for each project with the last draw occurring upon commercial operation. The availability of the credit facilities is subject to various conditions, including execution of mutually satisfactory documentation and approval of the United States Department of Energy (“DOE”) and the Office of Management and Budget (“OMB”).
John Hancock will act as the Lender Applicant under the Financial Institution Partnership Program (“FIPP”) that is supported by Section 1705 of the American Recovery and Reinvestment Act of 2009. Under this program, the DOE can provide a loan guarantee for up to 80% of loans provided to certain qualified renewable technologies. Ormat Nevada and John Hancock have submitted Part I of the loan guarantee application to the DOE. The process will continue with the DOE and John Hancock’s due diligence, followed by a conditional commitment for the financing, completion of documentation and closing of the financing.
Dita Bronicki, CEO of Ormat Technologies said: “This is our second portfolio of projects that we are submitting with John Hancock under the DOE Loan Guarantee program. The first application covers 3 projects in advanced stages of construction: Jersey Valley, McGinness Hills and Tuscarora, all located in Nevada. These new projects are part of the implementation of our growth program which is expected to increase Ormat’s generating portfolio by approximately 40% to approximately 750 MW by the end of 2013. John Hancock has been a valued partner to work with and we are excited for this opportunity to expand our, already strong, working relationship together. The DOE 1705 financing program provides favorable financing terms and we hope to benefit from this unique opportunity. ”
Source: Company release via PR Newswire