Raser Technologies in the news on capital raising and new PPA
Alexander Richter
1 Jul 2009
The drop of Raser Technologies stock based on news on recent capital raising, despite the signing of a favourable PPA with SCPPA is main issue of an article published on the company.
Reported in Nevada, and talked about earlier here, “Raser Technologies Inc. has reached a deal to sell to institutional investors shares and warrants that would give them control of about 13 percent of the company’s common stock.”
The now released article goes further in its description on the deal, which I thought should be interesting to post.
The article continues: “Wall Street apparently disliked the announcement, made early Tuesday. Raser’s stock price plummeted at the opening bell and closed down $1.05, or 27 percent, to end the day at $2.80 a share.
Raser did not say who the institutional investors are.
“It’s not something that we are releasing right now,” Issa Arnita, director of investor relations for the Provo-based alternate-energy technology company, said Tuesday.
The investors will buy 8.5 million shares and warrants for another 4.2 million shares for $25.5 million. Arnita said the transaction is expected to close Monday.
It’s unclear why the institutional investors want to buy the stock and warrants. None of the investors agreed to buy enough shares to trigger a disclosure requirement by the Securities and Exchange Commission.
“They would have to declare their intentions. However, no single institutional investor bought more than 5 percent of our stock in this deal,” Arnita said.
The shares will be purchased at a 22½ percent discount to the stock’s $3.85 closing price on Monday.
The warrants can be exercised any time in the next five years at $4.62 a share.
After deducting transaction expenses, Raser expects to net roughly $23.8 million. Arnita said the proceeds
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will help offset expenses related to a couple of geothermal power projects the company hopes to build near Milford.
Earlier this week, Raser said it reached a preliminary agreement to build a 110-megawatt geothermal plant at the Beaver County site and sell the electricity to the Southern California Power Authority.
The project will cost roughly $525 million, if it’s constructed. The authority would provide $400 million toward the construction and Raser would have to come up with the balance.
Raser, which employs about 60 people, also wants to construct a 42-megawatt project at the geothermal site. That project would cost $190 million if it, too, were built. The company has applied for a Department of Energy loan that would cover 80 percent of the cost, Arnita said.”
In a related news piece from earlier last week, details of the pre-paid PPA term sheet of Raser wwith Southern California Public Power Authority was released.
The PPA term sheet with SCPPA is “to sell 110 megawatts of renewable geothermal power to certain SCPPA member municipalities in a pre-paid arrangement. The power plants would be built at Raser’s Thermo, Utah site, over a three year period.
The term sheet establishes the basic terms of a Power Purchase Agreement, or “PPA,” under which Raser would develop 110 MW of geothermal power for sale to SCPPA in a pre-paid arrangement. Under a pre-paid PPA, the purchaser of the power pays for a portion of the expected power generation up front and then pays a reduced monthly amount for the remaining power and environmental attributes. The term sheet is non-binding, and either party can end discussions at any time, for any reason, without liability to the other party.”
Source: The Salt Lake Tribune, Market Watch
