Ormat integrating U.S. Geothermal into its business with closure of deal
Ormat Technologies announces closure of the acquisition of U.S. Geothermal and announces details on the planned integration of the business into its operations.
In a release today, Ormat Technologies, Inc. announces that it has closed the previously announced acquisition of U.S. Geothermal, Inc. for a total consideration of approximately $110 million, comprising approximately $106 million funded in cash by the Company to acquire the outstanding shares of common stock of USG, and approximately $4 million, funded from available cash of USG, to cash-settle outstanding in the money options to acquire outstanding shares of USG.
As a result of the acquisition, Ormat now owns and operates U.S. Geothermal’s three power plants at Neal Hot Springs, Oregon, San Emidio, Nevada and Raft River, Idaho with a total net generating capacity of approximately 38 MW. In addition, Ormat now owns development assets held by US Geothermal, which include a project at the Geysers, California; a second phase project at San Emidio, Nevada; a greenfield project in Crescent Valley, Nevada; and the El Ceibillo project located near Guatemala City, Guatemala.
The operating assets sell power under existing power purchase agreements at favorable price terms for the electricity, with an aggregated contract capacity of 55 MW. Ormat plans to improve the acquired operating assets and implement synergies and cost reductions which are expected to improve profitability of the operating projects by approximately 50% during 2019.
Ormat has put in place a comprehensive integration plan to assure continuous operation of U.S. Geothermal’s assets. The Company is pleased to retain a number of U.S. Geothermal employees and welcome them to Ormat.
“The acquisition of U.S. Geothermal expands our geothermal portfolio and our prospect inventory. We see many opportunities to improve efficiency and capacity over the next couple of years,” said Isaac Angel, CEO of Ormat Technologies. “As a leading vertically integrated geothermal company, we expect the integration will be seamless. We are certain that together with the skilled employees that we will retain we can achieve great accomplishment and improve the profitability of these operations and demonstrate the accretive value of this acquisition in the near term.”
The Company anticipates that the acquisition of U.S. Geothermal, Inc. will be additive to its electricity segment 2018 revenue in the amount of approximately $23 million and will reflect approximately $13 million in incremental EBITDA and Adjusted EBITDA1. The expected EBITDA and Adjusted EBITDA attributable to the non-controlling interest is approximately $4 million.
On May 7, 2018, the Company will issue financial results for the first quarter of 2018, at which time it will provide a more comprehensive update on full year 2018 guidance inclusive of this acquisition.